What a Carbon Registry Is Actually For

A carbon registry properly has two jobs, and only two. It is the system of record: the place a credit is issued with a serial number, held in a named account, and finally retired. And it controls what is allowed onto that record: the methodologies, the verification requirements, the rules a project must meet before a single credit exists.

Those two jobs are not small. Every claim made anywhere in the market traces back to them. If the record is wrong, nothing built above it is worth anything; if the standards are weak, the record is a faithful account of something worthless. Done perfectly, they are the foundation of the asset class.

Done alongside custody, clearing, and settlement, as they are today, they are done at the expense of market formation. The disclaimers registries write are not carelessness. They are an accurate statement of what a standards body is built to do, which is exactly why a standards body should not be holding the asset, clearing the trade, or standing in the way of settlement.

So there is a request here for the registries: amend your terms of use, and step out of the three jobs that require capital, supervision, and liability you were never built to carry. Give up the discretion to reverse a transfer once made: nothing an operator can undo at will is ever treated as settled. Recognize an account controlled by a regulated custodian as of right, not as a favor granted case by case. And drop the consent gate on related instruments: whether a security may be built referencing a credit is a question for securities regulators and counsel, not for the body that sets methodologies.

None of these constraints is a dependency; they can be architected around. The market simply forms faster, and cheaper, if they are lifted.

Limiting the scope of services this way also settles the question of which registry wins, by making it irrelevant. A custodian holds positions across many venues; a clearing house does not care which record system the underlying sits in. Put the securities layer above the registries and it spans all of them: an institution holds a portfolio drawn from several records in one account, priced on one basis, settled under one set of rules. Every registry keeps its standards, keeps its record, and competes on the quality of both. None has to win, and the market stops waiting for one to.

Two jobs, done perfectly, everything else handed to specialty institutions. That is a larger role for registries, not a smaller one, because higher transaction volume means more capital priced off the record they provide.

With the registry’s role focused on what market formation requires, we turn to regulatory questions.

Next up: One Genus, Two Species.

Part of No New Parts, a sixteen-part series by Andrew Gilmour.