The Gelephu Mindfulness City wrote environmental instruments into the list of specified investments in its Financial Services Act 2025, alongside shares and bonds, so a carbon business here has a regulator, a rulebook and a licence category from day one. Basnet Law Pte. Ltd., the first law firm incorporated in the Gelephu Mindfulness City, advises developers, traders, platforms and corporate buyers on carbon credits, allowances and renewable energy certificates under the Financial Services Act 2025. This page explains what the Act covers, who needs a licence and how we structure a carbon business.
How we help
- Asking GFSO, in writing and before launch, whether each instrument the business will handle is recognised, and classifying unrecognised instruments as spot commodities, virtual assets or outside the perimeter.
- Mapping the business model to the regulated activities it triggers, from dealing and arranging to custody, trading facilities and carbon funds.
- Documenting the exclusions that keep corporate offsetters, sustainability consultants and energy suppliers outside licensing.
- Preparing the Financial Services Licence application for trading desks, brokers and marketplaces.
- Reviewing marketing and claims about the integrity, vintage and retirement status of credits against the promotion and misconduct rules.
- Structuring tokenised credit products and their custody.
How environmental instrument regulation works in GMC, in plain terms
The Financial Services Act 2025 defines an environmental instrument as a financial instrument, recognised by the Regulator, that does one of three things: enables its holder to emit greenhouse gases under an emissions trading scheme, which covers allowances; attests to the reduction or removal of greenhouse gases, which is the carbon credit; or attests to the environmental attributes of an underlying unit, which covers renewable energy certificates. The definition names no standard-setter and does not care whether the instrument sits in a registry or on a blockchain. What it insists on is recognition by the Regulator, and the Act does not say how recognition is given or list any recognised registry, standard or scheme. That decision is GFSO's to make.
Because a recognised instrument is a specified investment, the ordinary activity definitions attach to it. Trading credits for your own account is dealing as principal and for clients dealing as agent; brokering buyers and sellers is arranging; recommending credits is advising; holding credits for others is custody; running a matching venue is operating a trading facility; managing a carbon portfolio at your discretion is managing assets; and pooling investor money into a carbon fund is managing a collective investment fund. A marketplace may be doing several of these at once, and each must appear on its licence. None of it bites unless carried on by way of business in or from GMC. An unrecognised credit does not automatically escape: it may be a spot commodity, and a tokenised one may be a virtual asset, and the same activities extend to both.
The exclusions separate a regulated trading desk from a corporate procurement team buying credits to retire against its own footprint. A person does not deal as principal in environmental instruments unless it holds itself out as a market maker or as a buyer with a view to selling, underwrites or solicits the public, so a company retiring credits against its own emissions is outside. Dealing as agent, arranging, advising and custody are excluded where they are a necessary part of a non-financial business and not separately remunerated, so a separate brokerage fee defeats the exclusion for a sustainability consultancy. A supplier whose main business is selling goods or services is excluded for transactions connected with that supply, which fits a renewable energy developer selling certificates alongside its power. None of the exclusions applies to operating a trading facility. Futures made for commercial rather than investment purposes are excluded, so a forward purchase agreement for credits intended for delivery will often sit on the commercial side of that line.
Environmental instruments are not securities, so on the face of the Act the prospectus regime does not apply to an offer of credits, although GFSO may deem an investment a security and units in a carbon fund are securities in any event. The financial promotion restriction does apply: marketing recognised credits to GMC buyers needs a Licensed Firm, approval by one, or an exemption such as communications directed only at persons outside GMC, and misleading or deceptive conduct in relation to a specified investment is prohibited. Tokenising a credit changes the record, not the regulation. No GMC statute creates a carbon tax, an emissions trading scheme or a compliance market; the Act regulates dealing in these instruments and does not create demand for them. Licensing follows the standard GFSO route through In-Principle Approval, with capital set by the Regulator rather than the Act.
Who this is for
- Carbon project developers and registries seeking recognition of their instruments.
- Trading desks, brokers and matching platforms for allowances, credits and attribute certificates.
- Renewable energy developers selling certificates alongside power.
- Corporate buyers and sustainability consultancies that need to know whether their activity stays outside licensing.
How an engagement runs
- Instrument inventory. We list every instrument the business will handle, raise the recognition question with GFSO in writing and classify anything unrecognised.
- Activity map. We match the business model to the regulated activities and record which exclusions apply and why each condition is met.
- Licence or exclusion file. For licensed models we prepare the application, business plan and Approved Person filings; for excluded models we document the reliance.
- Contracts and marketing. We draft forward purchase, brokerage and custody agreements and clear promotional material.
- Launch and supervision. We support the In-Principle Approval conditions and the ongoing conduct obligations.
Frequently asked questions
Are carbon credits regulated in GMC?
Yes, where they are recognised by the Regulator. Recognised allowances, carbon credits and attribute certificates are specified investments, so dealing, arranging, advising, custody, platform and management activities in them by way of business in GMC need a GFSO licence unless an exclusion applies.
Which registries or standards does GFSO recognise?
The Act does not name any, and it does not prescribe the form recognition takes. Recognition is a matter for the Gelephu Financial Services Office, which is why we raise it first.
Does a company need a licence to buy credits to offset its own emissions?
Usually not. A buyer that does not hold itself out as a trader, does not buy with a view to selling and does not solicit the public is outside dealing as principal, and a supplier's transactions connected with its own goods or services are also excluded. We confirm the position against the facts.
Is a prospectus needed to sell carbon credits?
Not on the face of the Act, because environmental instruments are not securities, unless GFSO deems the instrument a security. Units in a carbon fund are securities, and the financial promotion restriction applies to any marketing.
Talk to GMC counsel on the ground
Basnet Law Pte. Ltd. is the first law firm incorporated in the Gelephu Mindfulness City. A short conversation early in a matter usually saves time and cost later. Write to basnet@basnetgmc.com or office@basnetgmc.com with a few lines about your plans, and we will tell you plainly what is needed, how long it takes, and whether we are the right fit.
You may contact Basnet Law at basnet@basnetgmc.com or office@basnetgmc.com for any legal queries related to GMC.
