From tokenising carbon allowances to tokenising all real world assets
Author: Wang Yanhua
11 years ago, Ras Vasilisin founded Virtuse Group, one of the world’s largest carbon emissions trader. Then he saw vast potential in the blockchain industry and founded Virtuse Exchange this April, a decentralised blockchain platform with a vision of letting all real world assets be tokenised.
Block Asia caught up with Vasilisin and Virtuse Exchange head of Asian development Rob Chong to find out the story behind the ambitious startup.
Vasilisin told Block Asia that the idea stemmed from blockchain emerging as a way to consolidate the carbon trading market.
“We originally wanted to build a carbon trading blockchain platform, but we realised that instead of building a blockchain platform just for one commodity, we can build it for every commodity, not just carbon.”
“If we combine three hundred trillion of the world’s assets, we are going to build the largest exchange in the world.” said Vasilisin.
Vasilisin sees an untapped business opportunity in bridging real world assets to cryptocurrency tokens. He said, “Cryptocurrency assets are a thousand times smaller than real word assets.
“The number one reason for setting up Virtuse Exchange is because we believe that current exchanges are inaccessible for normal people. I’d like to change that. Right now, exchanges are expensive as they involve middlemen. You cannot trade on exchanges such as oil and gold 24/7 too, there are opening and closing hours.
“We can tokenise pretty much anything you want as long you meet our protocol.”
BLOCKCHAIN IN CARBON TRADING
Blockchain has been upheld as the key to make carbon trading more transparent and effective, which was what stirred Vasilisin’s interest in blockchain.
Vasilisin and Chong are firm believers that carbon trading is the best way to fight climate change.
Vasilisin said, “We’ve been involved in carbon for so long. From 2010 onwards, and 2013 we went to China as well. We believe that the main driver for decarbonisation is carbon trading.”
“If we bring up the price of carbon to a high level, the big factories and plants would want to adopt better technologies,” Chong added.
Carbon trading is not without its controversies. Virtuse Group pioneered the carbon emission industry under European Union’s Emissions Trading Scheme (EU ETS) in 2010, but there has been a wide gap between environmental rhetoric and reality in the EU ETS.
Some argue that in their decade of existence, such carbon trading markets have offered new means for the heaviest polluters in fossil-based industries to delay structural change. By encouraging various types of offsets rather than by fostering innovation to reduce dependence on fossil fuels, some find carbon trading’s effectiveness questionable.
But Vasilisin and Chong see blockchain as the potential fix for carbon trading.
“Virtuse Group is one of the three biggest carbon brokers in EU. Naturally, we have a wide portfolio of carbon allowances. In Virtuse Exchange, we tokenise carbon allowances into crypto assets to make it accessible for everyone to trade,” Chong said.
He cited the current shortcomings of carbon trading, “Currently, carbon allowances trading are mainly for emitters while entry barrier to enter this market is high. Carbon allowance prices are also regional, like China, US, and the EU.”
Drawing from the experiences of Virtuse Group, Virtuse Exchange aims to fix a high global price for carbon.
“What we’re trying to create for the first time is a universal carbon price. When we can put a price for carbon globally for the emitters, it is harder for each country to manipulate the price,” Vasilisin added.
Chong told Block Asia about the challenges Virtuse Group has faced in carbon trading.
He said, “We face a lot of challenges from Chinese government policies. Currently this industry is still very policy-driven. Without the support of the government it is very hard to bring it forward, yet all these big industries are lobbying with the government.
“We started covering Chinese emission markets in 2013. But since last year it came to a halt as the Chinese government has already achieved their emission targets through other means. They then decided not to mandate polluters to pay for what they pollute.
“That is why we want to bring carbon to blockchain and make it available for everyone to invest, not just entities. This will bring up the carbon price due to increasing demand from more investors. It will spread awareness to a wider audience and bring up the price of carbon so carbon trading can deter polluters.”
THE PATH FORWARD
Virtuse Exchange is launching its initial coin offering in June. To grow its community, it plans to carry out activities like “airdrops, bounty programs, working with crowdsource, e-commerce platforms, gaming platforms to increase awareness of Virtuse Exchange”, according to Chong.
The beta release of Virtuse Exchange will also be available in June to selective users for active trading.
Vasilisin said, “We want to tokenise assets that are not easily accessible to individuals as of now. There is unlimited potential as to how much value we can create.”