The topics of sustainability and sustainable investments are in the hot seat, especially following COP29 which took place last month. Throughout Abu Dhabi Finance Week (ADFW) organisations were showcasing their thought and ambitions on how they are going to achieve sustainability in the future. Sitting down with Nick Jones, we learnt how his company Zumo, the digital-assets-as-a-service platform is creating a more sustainable world.
Following a partnership which took place in October 2024 with Commercial Bank International (CBI), a UAE bank, Financial Conduct Authority-registered Zumo has continued to make its presence known in the Middle East and Africa (MEA) region. During ADFW, Mark Walker, editorial director, The Fintech Times, got the opportunity to speak to Nick Jones, Zumo’s CEO and co-founder, about how sustainability is becoming a growing focus in MEA.
What is your focus in Abu Dhabi right now?
Nick Jones, CEO of Zumo
At Zumo, we provide a two-pronged service for companies involved in digital assets. Firstly, we offer a compliant platform which delivers custody, self-custody, brokerage, send and receive AML, KYC services and fiat on and off ramps. As such, we’re focused on partnering with companies who want compliant access to the crypto and digital asset space.
Secondly, through Zumo Oxygen, we provide partner businesses with a way of measuring the carbon footprint of their blockchain activities and then mitigating that through the purchase and tokenization of renewable energy.
Both of those pieces are relevant here in Abu Dhabi as there are numerous companies wanting to access the market – be they retail banks or fintech companies wanting to add crypto to their platform. Particularly here in Abu Dhabi where we have large asset managers and big banks moving into the space, there are a lot of ESG mandates which the Zumo Oxygen product resonates strongly with.
How are you using the principles of ESG and sustainability to develop tokenisation solutions?
In the financial blockchain sector, we’re currently seeing priorities align with that of the greater financial services ecosystem which is turning towards more ESG-focused projects and initiatives.
The direction of travel of the financial services industry is currently going towards sustainability, so we’re seeing a lot of investment in climate tech. As a relatively new industry, with regulations only just coming in, it’s been a fairly small ‘coalition of the willing’ so far.
Regulation drives good behaviour and we’re seeing that in Europe at the moment. The incoming MiCA regulations are the first set of crypto rules anywhere in the world that have sustainability requirements as a part of the regulations.
We’re very busy helping a number of large crypto firms become compliant with the sustainability elements of MiCA,
Ultimately, sustainability is one of the things that will help drive institutional adoption further. The easier you make it for a large institution to mitigate any kind of environmental risk associated with working with the blockchain or working with digital assets, the better.
Are sustainable practices separating digital assets from the myth that ‘crypto is a bad, unsustainable practice’?
The fact of the matter is blockchain uses lots of electricity. Although blockchain has many advantages as a transaction methodology, it is also inefficient from an energy use point of view. However, more modern blockchains use a lot less energy than the early ones. Newer chains are more efficient and they better suit transaction and Web3 applications.
From a Zumo point of view, we help firms understand what their individual carbon footprint or the electricity footprint is based on their blockchain activities. We’re not looking at the economic impact of the chains they use as a whole. We don’t look at the impact of mining so much as the electricity footprint they’re leaving behind when making transactions.
You can understand in a very granular way that footprint is, and then you can buy renewable energy and tokenise it. This shows that you’ve bought the same amount of renewable energy as you have used. This enables you to create something quite circular.
You’re using the energy-hungry nature of blockchain to drive the transition and demand for renewables. We see that as being a key factor in all of these Web3 technologies which, ironically, are key for driving energy transition and combating climate change.
We need blockchain for smart grids and we AI to be able to have the computational power to build the climate tech. But both blockchain and AI, and data centres more broadly, use lots of electricity, which, in itself could be a bad thing. But if that demand for electricity is being used to drive the transition to renewables, there’s a strong argument to say that it’s not just mitigation, it’s actually transition-driving activity.
I think this is something that’s now being embraced by the industry.
What is the more interesting side of this transition: the climate, renewable energy side or the digitalisation side?
We see the digitalisation of the space as inevitable. This comes with massive advantages in terms of transparency, traceability and access to different types of products.
The consensus is we’re just at the very beginning of real-world asset tokenisation. It’s broadly accepted that this is happening, one way or another.
There are obvious and clear benefits to the digitalisation of finance, in the same way as there’s clear benefits to the digitalisation of identity, for example. We have to understand there’s an impact with any new or old technology. We’re not going to stop using these energy-intensive technologies straight away. In fact, they’re going to grow. So the key part is accepting this and then working out, how we align the need for most of the world’s electricity to come from renewable sources. This is the exciting bit.
Using chains that use a lot less electricity for transactions than Bitcoin is a good way of mitigating the carbon impact of blockchain in the same way, if you’re in AI, then running an enormous language model to write an email, for example, might not be the best use of massive amounts of power.
We want to bring about societal and economic benefits, but we want to do so in a way that isn’t at the expense of the planet.
Is there any difference in the ease of adoption of sustainable digital asset practices between the Middle East and Europe?
The advantage of Abu Dhabi and the Emirates, in general, is the ability to do things quickly. Right now talking to you, I’m looking at a sign which says “this is the capital of capital” and it’s right. This is not a cash-constrained part of the world and it’s a part of the world which understands that whilst it’s still maximising its oil production, it is on a transition journey, because it knows that it’s, you know, in 25-30 years time, it won’t be able to be dependent on oil for its continued prosperity.
This is why we’re seeing the massive amount of investment that’s going into things like solar. There’s also a lot of interest here because of the excess energy. This is why it’s a great place to mine Bitcoin – there’s a lot more extra electricity here than there is in some older markets.
There’s loads of advantage here. There’s the ability to have pace, and there’s a smaller population which means the regulator will be able to be more flexible because there are fewer end users.
Is sustainable adoption going to be institution or customer-led?
It’s always a mix of top-down and bottom-up. There’s an interesting juxtaposition that young people are the ones who embrace crypto and the digital economy the most, but they are also easily the most environmentally aware generation – and rightly so given they’re going to be living in a much hotter world.
Wherever you are in the world, you speak to young people, and they are equally interested in, how do they generate a more equitable financial future and generational wealth and what the world is going to look like 20-40 years time.
The reality is, that capital will follow the biggest economic opportunity. Even under the new Trump administration, industry players are confident that investment in climate tech is the investment for the future, even though in the next few years, investing in oil will likely see greater yields as Trump will remove some regulations.
It’s very interesting to see some of the biggest investors on Wall Steet hedging their long-term – 10, 25, 50 and even 100-year-long bets by focusing on sustainability.
It’s reassuring to hear that hard-nosed investors are focusing on energy transition strategies in their long-term plans
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