The Voluntary Carbon Market Integrity Initiative (VCMI) today launched its Claims Code of Practice (the Code). The purpose of the Code is to provide clear guidance to companies and other non-state actors on when and how they can credibly make voluntary use of carbon credits as part of their net-zero commitments and climate mitigation strategies, and the claims they can make about that use (see our earlier bulletin here). The Code is expected to have a significant influence on best practices for claims and disclosures on the demand side of the voluntary carbon market. The Code follows a four-step process briefly summarized below that companies can choose to follow to make credible, voluntary use of carbon credits and receive validation in the form of a “VCMI Claim”. 1. Comply with the Foundational Criteria. The Code provides that before a company makes voluntary use of carbon credits (i.e., making a VCMI Claim), the company must adhere to the following four foundational criteria: Maintain and publicly disclose an annual greenhouse gas emissions inventory. Set and publicly disclose validated science-based near-term emissions reduction targets, and publicly commit to reaching net zero emissions no later than 2050. Demonstrate that the company is on-track towards meeting a near-term emissions reduction target and minimizing cumulative emissions over the target period. Demonstrate that the company’s public policy advocacy supports the goals of the Paris Agreement and does not represent a barrier to ambitious climate regulation. 2. Select a VCMI Claim to make. The Code outlines three tiers of enterprise-wide claims and requirements (silver, gold, platinum) that are intended to be aligned with the Science Based Targets initiative (SBTi) and High-Level Expert Group on the Net-Zero Emissions Commitments of Non-State Entities, established by the UN Secretary-General, that companies must review and determine whether they are able to meet. The below table provides an overview of the three…
The U.S. Securities and Exchange Commission (SEC) today charged Coinbase, Inc., the largest crypto asset trading platform in the U.S., with operating a crypto asset trading platform as an unregistered national securities exchange, broker, and clearing agency as well was failing to register the offer and sale of its crypto asset staking-as-a-service program (the Complaint). Regulators across the world are increasing their oversight of new and emerging securities and crypto carbon offerings should heed the recent actions of the SEC and carefully examine whether their offerings constitute unregulated securities. This bulletin briefly summarizes key details of the Complaint. The SEC’s Complaint alleges that Coinbase intertwines the traditional services of an exchange, broker, and clearing agency without having registered any of those functions with the SEC as required by law. The Complaint alleges that since 2019, Coinbase has: provided a marketplace and brought together the orders for securities of multiple buyers and sellers using established, non-discretionary methods under which such orders interact; engaged in the business of effecting securities transactions for the accounts of Coinbase customers; provided facilities for comparison of data respecting the terms of settlement of crypto asset securities transactions, served as an intermediary in settling transactions in crypto asset securities by Coinbase customers, and acted as a securities depository; and engaged in an unregistered securities offering through its staking-as-a-service program, allowing customers to earn profits from the “proof of stake” mechanisms of certain blockchains and Coinbase’s efforts. The SEC stated that Coinbase’s actions “deprive[d] investors of critical protections, including rulebooks that prevent fraud and manipulation, proper disclosure, safeguards against conflicts of interest, and routine inspection by the SEC” and that its failure to register its staking-as-service program “depriv[ed] investors of critical disclosure and other protections.” The Complaint follows yesterday’s similar charges, including several alleged securities law violations, against…