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DeepMarkit Corp (TSXV:MKT) has signed a letter of intent with Japan’s Bloom X Alliance which paves the way to a referrals alliance for DeepMarkit’s NFT platform. Under the terms of the proposed deal, BloomX will introduce and onboard carbon credit projects onto the blockchain through DeepMarkit’s proprietary minting platform, MintCarbon.io.

Based in Japan, BloomX is a blockchain-based products and services company seeking to reduce cost and improve efficiency of international asset transfers. It looks to participate and invest in blockchain-based products and services as well as other technology-enabled and related growth opportunities.

How will this benefit DeepMarkit and BloomX?

Under the terms of the proposed deal, DeepMarkit is expected to benefit from extensive and diverse exposure to numerous new carbon projects, as well as an increased level of validation in the ASEAN carbon offset community. MintCarbon.io is expected to receive increased transaction volume as a result of any and all users referred by BloomX that mint existing credits into NFTs.

BloomX will receive a fee for referring carbon projects to DeepMarkit, which will be payable by DeepMarkit in cash, or at DeepMarkit’s discretion (subject to applicable laws), common shares of DeepMarkit. Under the terms of the LOI, DeepMarkit and BloomX will conduct necessary due diligence and negotiate the terms of a definitive agreement to govern the terms of the arrangement.

DeepMarkit, already aligned with Gold Standard and Verra, has already demonstrated its understanding of the intricacies of carbon markets. By providing improved transparency in carbon credit pricing and transactions, MintCarbon.io has the potential to make a notable impact on Japan’s push toward becoming ‘Net Zero by 2050’ and encourage more companies to participate in the carbon market, thus accelerating decarbonization in Japan. This represents a significant new area of possible growth for DeepMarkit, which already seems to be gaining traction in other parts of Asia.

“The expected arrangement with BloomX will work continue to open new doors for DeepMarkit in the vast Asian market. Asia-based Radiance Asset Berhad’s support of MintCarbon.io has been critical, now supplemented by BloomX, DeepMarkit’s footprint in the Asian markets is expected to expand at a faster pace.”

Ranjeet Sundher, CEO of DeepMarkit

What does the Japanese carbon trading market look like right now?

Currently, carbon emissions are traded over the counter in Japan. The Japanese Ministry of Economy, Trade and Industry and the Japan Exchange Group plan to create the country’s first market for trading carbon emissions, launching a demonstration project in September 2022. The mechanism is planned to become fully operational in the fiscal year starting April 2023.

With its new policy, the country aims to improve transparency in prices, encourage more companies to participate in the market and foster decarbonisation in its economy. As an example of a leader in the field, Hitachi has committed to achieving carbon neutrality in its Scope 1 and 2 emissions by 2030 and carbon neutrality in its Scope 3 emissions by 2050. In order to achieve this goal, Hitachi introduced an internal carbon price in 2019 and raised the price from the initial 5,000 yen (US$37) per tonne to 14,000 yen (US$104) per tonne in 2021.

Why the BloomX deal makes sense for DeepMarkit

BloomX has an extensive network in the cryptocurrency community as its CEO is a member of the Crypto Valley Association, which is an independent, government-supported and world-leading blockchain organization based in Zug, Switzerland, which is helping it to build and expand blockchain-based services, such as NFTs and security tokens.

In addition, an advisor of BloomX, Ken Mazzio, is well known as a risk and compliance executive in the cryptocurrency industry for obtaining virtual currency licensing and building strong, regulatory-compliant control environments for Japanese and Filipino crypto-exchanges. He was also a member of the V20 (Virtual Asset Service Providers) Summit held in Osaka, Japan in 2019.

The ultimate structure of the arrangement will be subject to applicable regulations as well as applicable securities, corporate and tax laws. The definitive agreement, and any transaction completed in connection therewith, may be subject to TSX Venture Exchange approval.

Related

Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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