An allocator asked to hold a tokenised carbon credit, or a general counsel asked to sign off on one, is really being asked one question: if the token is burned tomorrow, does anything happen at the registry that issued the underlying credit? In the first large tokenisation programme, the answer was no, because the registry had recorded the credit as retired before the token existed. How that happened, and how the standard-setters have tried to close the gap since, is the part of this story that decides whether a token represents anything at all.
What a token is bridging
Carbon credits are not issued on a blockchain. They are issued by a crediting programme, principally Verra's Verified Carbon Standard (VCS), Gold Standard, the American Carbon Registry (ACR) or the Climate Action Reserve (CAR), each of which keeps its own registry of serialised units, one unit per tonne of carbon dioxide equivalent reduced or removed, tied to a specific project and vintage. Tokenisation, in the model of Toucan Protocol's Carbon Bridge, launched in late 2021, took an existing Verra credit and represented it as a token on a public chain. By early April 2022, CarbonPlan counted more than 21.6 million Verra units bridged this way.
The mechanism mattered more than the volume. To stop the same credit being used twice, once on the registry and once as a token, the bridge required the credit to be retired on the Verra registry before the token was issued. Holders could then trade the token, pool it, or "retire" it onchain by burning it. That onchain retirement had no effect at the registry, because the registry already showed the credit as retired at the moment of bridging. A buyer relying on an onchain retirement was claiming a benefit that the registry's own books recorded as already consumed.
The quality problem that surfaced first
Independent researchers found a second, separate problem in the same programme. CarbonPlan's analysis, published on 7 April 2022, found that about 28% of Toucan-bridged credits, some 6.0 million tonnes, came from what it called "zombie projects": projects with no public retirements for at least two years before Toucan, or where 95% or more of all retirements ran through the bridge. One project, VCS494, had its last retirement before Toucan on 30 April 2013, and more than 500,000 of its credits were bridged from November 2021. CarbonPlan also found that 99.9% of bridged credits would be ineligible under CORSIA, the aviation offsetting scheme, which excludes credits from projects started before 2016. It noted that HFC-23 credits, a category the EU had long since banned from its own carbon market, were bridged until Toucan tightened its eligibility rules for them. The picture was of a bridge drawing in old credits that had sat unretired for years, which is a question about the underlying projects that no token design can answer.
How the registries responded, with dates
Verra
Verra had said on 25 November 2021 that anyone creating crypto instruments from its credits did so entirely at their own risk. On 25 May 2022 it went further, prohibiting, with immediate effect, the creation of instruments or tokens from retired credits, on the reasoning that "the act of retirement is widely understood to refer to the consumption of the credit's environmental benefit". It ran a public consultation from 3 August to 1 November 2022, received input from 71 stakeholders, and on 17 January 2023 published a 170-page summary of the comments. The alternative it consulted on is immobilisation: an account holder would move live, unretired credits into a dedicated immobilisation sub-account in the Verra Registry, where they would stay locked while the associated tokens were on the market, with the link between each token and its credit made public. The consultation also asked whether credits should be capable of reactivation if the tokens were destroyed without their benefit being used. That design was put out for comment; we found no Verra statement that it has been adopted or is operating in the registry.
ACR
ACR updated its programme rules on 31 May 2022, effective immediately, to prohibit tokenisation of its credits without explicit ACR authorisation, citing the risk of double selling and of credits being used by more than one entity for environmental claims.
Gold Standard
Gold Standard changed its registry terms in May 2022 so that tokens, cryptocurrencies or other digital instruments representing its credits were not permitted without its express written consent. It consulted on the conditions for giving that consent from 28 September to 28 October 2022, reporting responses from more than 35 organisations and what it described as broad endorsement of its proposals. From March 2023 it ran a readiness phase with five companies from its working group on digital assets, Toucan, Flowcarbon, Thallo, Earthchain and Bitgreen. On its page updated in June 2024, Gold Standard said it was developing guidelines but that their introduction was not yet decided. In a January 2024 article, it stated the principle that runs through every registry's position: "Simply issuing a token does not confer legal rights to the underlying credit or impact the token is said to represent," and "without two-way communication with the issuing standard, tokens representing those credits risk becoming meaningless."
What a two-way bridge looks like
The clearest working example of that requirement is the bridge Toucan built with Puro.earth, a registry for carbon removal certificates, which Toucan described on 11 December 2023. Tokenisation locks the underlying certificates on the Puro registry rather than retiring them. Detokenisation burns the tokens and unlocks the certificates. Retirement sends the request to the Puro registry, and the tokens are destroyed once the certificates are retired there. The registry, not the token, remains the record a claim is checked against. On 8 May 2025 Toucan announced that it was moving to an open-source, community-driven model, alongside a new independent venture, Cedar, and said that existing tokens and core services such as the Puro bridge would keep operating as normal.
The quality label: Core Carbon Principles
A separate effort addresses the quality of the underlying credits rather than the mechanics of tokenisation. The Integrity Council for the Voluntary Carbon Market (ICVCM) sets ten Core Carbon Principles, including additionality, permanence, robust quantification, independent validation and verification, and no double counting. The label is voluntary: crediting programmes apply for assessment, and only approved categories of credit may carry it. On 6 June 2024 the Council approved its first seven methodologies, three for destroying ozone-depleting substances and four for landfill gas capture, covering an estimated 27 million credits. Five programmes with a combined 98% market share, ACR, ART, CAR, Gold Standard and Verra, hold CCP-eligible status, which means their governance passed assessment; it does not mean every credit they issue carries the label. The Council has continued category by category: on 7 March 2025 it approved three cookstove methodologies and one household biodigester methodology, with conditions, and rejected four older ones as insufficiently rigorous.
The label answers a narrower question than a token does. It says a methodology met a quality bar. It does not say that a particular token's underlying credit is currently locked, unretired and available to be claimed.
What a holder can actually claim
Three questions matter to a counterparty: is the credit real, is it still unclaimed, and does the person retiring the token have the right to make an environmental claim on it. None can be answered from a blockchain explorer alone; each requires the issuing registry's record for that serial number. A February 2025 analysis by the law firm Osler called it "essential" that tokenised credits "maintain a connection to the original registry" and comply with that registry's rules, and noted that on some platforms retiring the token also retires the registry credit, which is what prevents double counting. Where a bridge breaks that link, as the original retire-then-mint model did, a token can keep trading while the registry shows nothing left to claim.
This is a description of how a class of instruments has been built and rebuilt since 2021. It is not investment, tax, legal or accounting advice, and it is not an assessment of any token, project or registry entry.
What remains unresolved
Verra's immobilisation model, its own answer to the problem it identified in 2022, remains a consulted-on design rather than a published registry function, and Gold Standard said in 2024 that its guidelines were not yet decided. The two-way model has been demonstrated with Puro.earth's removal certificates, not with the far larger stock of Verra and Gold Standard credits. Whether the largest registries will open live, registry-linked tokenisation to their inventories is not settled. For institutions weighing tokenised real-world assets more broadly, the discipline this market is still building, an authoritative record that a token cannot outrun, echoes the checklist in institutional RWA tokenisation from pilot to production, and the retirement problem is carbon's version of the redemption question examined in tokenised gold and commodities.