The CFTC’s First Guidelines for Carbon Credit Markets

In an effort to improve market transparency and stop fraud, the U.S. Commodities Futures Trading Commission (CFTC) has released its first set of rules for trading carbon credit derivative contracts.

The U.S. Commodities Futures Trading Commission (CFTC) has adopted its initial set of rules for trading voluntary carbon credit derivative contracts. The right to emit one metric tonne of carbon dioxide or similar gases is represented by carbon credits, which give these contracts their value and enable traders to speculate or hedge against future price changes. Concerns about quality and greenwashing are addressed, and the guidelines concentrate on strengthening control and combating price manipulation. This action comes after more extensive regulatory initiatives to increase confidence in voluntary carbon markets and increase transparency, both of which are crucial for businesses looking to reduce their emissions.