Nouriel Roubini’s firm to create digital token with climate goals—yes, you heard that right

Economist Nouriel Roubini doesn’t like Bitcoin or “crypto.” That’s probably an understatement. So it was with much surprise and equal bemusement, to see his investment firm, Atlas Capital, reveal plans for a “stablecoin” digital token called ACT (Atlas Climate Token), backed by a basket of “sophisticated climate investment products” known as the Atlas Index.

A stablecoin with stated climate goals and with its value “backed” by… investment products. We’re well-used to gimmicks in the blockchain world, but this sounds like the most “2020s” idea we’ve heard this month. Could it be that Roubini is not only late to the party with his token launch, but he’s also jumped into the wrong end of the pool?

To be honest, we’re not so much disappointed at Roubini’s association with an investment token launch as we are by the way it’s being promoted. Without firm and upfront guarantees that a new digital asset is based on sound legal and accounting principles, it sounds like many other ICO/NFT/altcoin schemes we’ve seen over the past decade.

For reference, look at Zero13’s collaboration with Tokenovate, a project with similar ecological and economic goals to ACT. You can find out all about how it works—and how any tokenized digital asset system claiming “net-zero economy” goals should operate—in CoinGeek’s interview from London Blockchain Conference 2023.

Tokenovate CEO Richard Baker noted that “precious little additional information (on ACT) was shared at the time of launch, leaving us with a few questions unanswered.”

“First, a tokenized investment portfolio of assets that demonstrate the ability to perform in-line with inflation is not a ‘stablecoin’ as most people understand it. A tokenized digital asset can, of course, be a very effective tool to protect against inflation and, if tokenized the right way, could also be used for settlements if accepted by all parties,” he said.

“Second, if your goal is to use tokens as digital money, you have to consider interoperability and regulatory requirements carefully. Not to mention security and scalability. From what we have seen so far, the ACT is light on details regarding these crucial aspects,” he added.

What the Atlas ACT ‘stablecoin’ asset does, in theory

Atlas Capital, where notorious “permabear” Roubini is Chief Economist & co-founder, describes the token-based approach as: “democratizing access to modern investment solutions” by providing opportunities to everyday investors that might otherwise be available only to high net-worth individuals.

The value of ACT is pegged to Atlas Capital’s portfolio of “liquid real-world assets: climate-resilient REITs, strategic commodities, inflation-hedged sovereign bonds, and gold.” In a one-page explainer PDF (available to download here), the firm provides one-page PDF explainer with a handy chart comparing the Atlas Portfolio to the U.S. Dollar adjusted for inflation—US$1 invested in the portfolio in 1991 is now worth $4.13, whereas the 1991 US$1 itself is only $0.46.

This is an interesting take on the “stablecoin” concept, to say the least. Atlas argues that although its tokenized portfolio has appreciated in value (so far), the dollar itself has fallen in real value—implying that although ACT isn’t literally “stable,” neither is the USD.

Otherwise, ACT’s one-pager hits all the buzzword targets you’d expect to find in a 2020s new-economy technology/investment brochure. These include AI/ML, “legacy assets,” TradFi and DeFi, “green metals,” “resilient real estate,” democratization, re-imagining, sustainability, socially-responsible investing, and “safety” (we were surprised not to find “equity” or “diversity” in there).

The ultimate goal of both the Atlas Index and ACT token is a “global transition to a net zero economy.” However, it’s the price chart that is most prominent on the page, and that’s the metric readers are expected to pay attention to: get your ACT tokens, and the line goes up (also novel for an asset described as a stablecoin).

It’s hard to guess how serious the ACT asset is since the homepage and one-page explainer reveal almost no technical detail on how the token or its underlying contract ties it to Atlas’ investments; if anyone other than third-party exchanges will “redeem” ACT for fiat currency; or even what blockchain or token protocol it will exist on. However, it does promise to be “regulated” at least twice, without giving details on who will do the regulation or how.

It’s also hard to know how enthusiastic Roubini is about ACT personally since he’s made no public comments about it (that we could find by scrolling through his X/Twitter feed). To speculate on his internal monologue for a second, we might assume he’s aware that promoting any kind of blockchain asset—even one his company created—is bad optics for someone with his outspoken history.

However, Roubini is co-founder and Chief Economist at Atlas Capital, and his name is next to CEO Reza Bundy on the ACT information sheet. On the website, there’s also a five-minute video of Roubini talking about Atlas Capital’s strategy of investing in the “three Cs” of “credit, commodities, and communities.”

“This is a very crucial and dangerous time in history for the world at large,” Roubini says in the recording, mentioning new investment risks that will come with climate change, new pandemics, out-of-control inflation, civil unrest, and war (all very standard fare from an economist nicknamed “Dr. Doom”).

The Atlas Index was created in collaboration with Goldman Sachs (NASDAQ: GS), he says, and his team is “working with global regulators to launch our products thoughtfully and carefully.” These will include “ETFs and digital assets that are security tokens backed by the underlying assets.”

Blockchain’s ‘cesspool of lunatics’ vs. buy-my-new-token

Now, there’s nothing particularly wrong with Atlas’ plans other than the gimmicky messaging and lack of technical detail. All their ideas could work just fine on an unboundedly scalable blockchain like BSV. However, Roubini appeared angered at the very thought of BSV when informed about its potential (perhaps it’s the “Bitcoin” name?)

Other than his latest plans to release new digital assets, Roubini has been consistent with his anti-Bitcoin/crypto stance over the years. He was most recently seen online associating digital assets with Hamas terrorism.

This tweet, posted back in 2018, offers a neat summary of his feelings:

99% of crypto land is one shitcoin traded for another shitcoin. And the average shitcoin lost 90% or more of its value in the last year. So Crypto Land is Crap Land, a cesspool of lunatics with severe Freudian scatological obsessions that swim 24/7 in their own stinking shit.

— Nouriel Roubini (@Nouriel) October 11, 2018

That doesn’t sound like someone who’d be launching his own token five years later…or ever.

He couldn’t even be persuaded that BSV is blockchain-done-right. As a guest speaker at the CoinGeek Zurich conference in 2021, he said the fundamental value of BTC was not zero, but negative. Participating in a panel discussion after his presentation, he stuck to his guns with some fiery rhetoric even after arguments from Dr. Craig Wright and Ian Grigg. Although it was clear he still saw BSV blockchain as an asset in itself (rather than its scalable blockchain ecosystem) and through a basic crypto-investors lens, along with all other blockchain assets.

Aside from that…how do you actually use tokens to achieve ‘net-zero’?

Atlas Capital describes its Index (and presumably the token also) as “a thematic investment strategy to accelerate the global transition to a net zero economy.” This will happen, apparently, as a result of their investing in the right places.

Here’s another point where Tokenovate’s plans to actually bring about a net-zero reality are more serious, Baker said:

“ACT talks about investing in the underlying assets but does not actually address supporting the actual progress towards Net Zero, which must involve wholesale changes to industrial processes to reduce and actively remove carbon from our atmosphere.”

“Tokenovate’s distributed financial market infrastructure facilitates the issuance, life cycle management, and trading of digital assets, including VCCs.”

Tokenovate’s approach to supporting the transition towards Net Zero by using tokenization takes both regulations and reporting into account from the start, he said. His company’s plan involves building smart legal contracts based on industry-standard ISDAs. It’s also building that solution on the BSV blockchain, which scales—technically and commercially—further than any other blockchain and has never been hacked.

“Bitcoin inherently solves these challenges, and it’s an honor to put the technology to good use for this market need,” Baker noted.

We live in hope that, one day, perhaps, Nouriel Roubini will come to understand this as well. We won’t hold our breath, but from what we’ve seen lately, anything is possible.

Watch: Nouriel Roubini delivers a keynote speech at CoinGeek Zurich