SMX PLC (NASDAQ: SMX; SMXWW) shares rallied over 18% intraday on Tuesday to $1.35 after announcing the planned Q2/2024 launch of its groundbreaking Plastic Cycle Token. The initiative is designed to present a reliable, ethical digital credit platform to capitalize on billions of dollars in recyclable plastic credit value in a newly created market that will incentivize companies to fill the supply chain gap where only about 9% of plastic is recycled globally. For SMX, the initiative positions them ideally, perhaps exclusively in some respects, to maximize its share of a recycled plastics market that in 2021 was worth over $40 billion.
While SMX didn't provide names of current or potential partners in this mission, they did guide to expect some soon, saying, "The contemplated collaboration is expected to amalgamate a diverse array of partners and sponsors, each contributing distinct skills and expertise to create the Plastic Cycle Token. Consortium members are being identified and will be selected to provide deep domain knowledge and technology to ensure best practices and technical proficiency."
Their expertise will complement SMX's, which has already introduced revolutionary invisible marking technology, enabling companies to transition towards sustainable, transparent, and accountable practices. That reach includes providing its revolutionary technology to oil producers, waste management firms, mining, and manufacturing sector companies to provide an effective and measurable method of recycled content utilization. This new initiative will add enormously to the already compelling SMX value proposition.
Creating A Marketable Plastic Token
The marketable plastic cycle token, with its potential to be tradeable on global exchanges, could be a game-changer to plastics recycling and a much-needed alternative to carbon credits. Better still for SMX and its investors, the created SMX Plastic Cycle Token could usher in that market, creating a new paradigm in the Impact ESG investment landscape. And it's no small opportunity.
Comparing the planned SMX Plastic Cycle Token market opportunity to the Carbon Trade eXchange (CTX), SMX could be in the sweet spot to help facilitate exchange in an over trillion-dollar market. The global carbon offset/carbon credit market, in terms of revenue, was estimated to be worth $414.8 billion in 2023 and is expected to reach $1.6 trillion within five years, fueled by a forecasted CAGR of 31.0% into 2028. Keep in mind that SMX has a massive head start, competitively speaking.
Using SMX's technology to physically mark the plastics, potentially offering a tangible impact on environmental circularity, each token will inherently represent a quantifiable amount of recycled plastic. Providing that, the SMX Plastic Cycle Token should immediately align with the European Union's efforts to address the limitations of the current carbon credit system. Problems with that system are many, primarily related to ensuring compliance despite its adopting a strict mass balance definition. However, the EU is learning from its mistakes by evaluating more defined measures to regulate and monitor recycling programs.
Part of that includes the proposed 2023 EU Packaging and Packaging Waste Regulation by the European Commission, which aims to recycle at least 50% of all EU plastic waste by 2025. That's doable.
Mass balance, a chain of custody model under ISO standard 22095, is already utilized in sectors like biofuels and fair-trade commodities. However, many, including SMX, argue that there are more efficient models than this. It's reportedly led to several major corporations formally advocating a strict mass balance measurement with chemical and physical traceability to level the playing field. That's excellent news for SMX since its technology enables physical traceability, directly and uniquely supporting the Plastic Cycle Token model. The better news is that SMX offers a win-win proposition by incentivizing genuine plastic recycling, with the value of adhering to policy generating a potential cash windfall from credits to companies that comply.
A 20% Rally With a Tailwind
SMX wins as well. Keep in mind that no other known company has similar technology that can precisely and tangibly identify the origins and composition of raw materials in consumer products and packaging. In other words, for companies committed to promoting efficient recycling and reuse, SMX could be the only game in town. And with its chemical marker virtually impossible to destroy, combined with its reader technology and blockchain data storage, that position may be impenetrable in the competitive landscape. Actually, by facilitating a global system for grading and certifying plastic recycled content, SMX's advantages may be so significant that few would even want to challenge their position.
Thus, despite the bullish move on Tuesday, SMX stock still presents enormous near and long-term growth potential. And with updates about its Plastic Cycle Token expected, potentially naming big-name partnerships, the momentum behind that upward trajectory could increase sooner rather than later. In fact, with volume rising and its share price over 17% higher since last week, it appears it already is.
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