Financial Instruments & Strategies Supporting SDG-Related Projects: The Role Of Cryptocurrency

Abstract

The global Sustainable Development Goals (SDGs) require innovative and scalable financing solutions to bridge a significant funding gap in clean energy, infrastructure, and social development sectors. Recent advancements in cryptocurrency and blockchain technology have introduced novel financial instruments and strategies that can support SDG-related projects. This paper explores how decentralized finance (DeFi), tokenization, and crypto-economic systems can be leveraged to mobilize private capital, de-risk investments, and incentivize sustainable behavior[1]. Blockchain offers rich transparency, traceability, and efficiency as mechanisms to enhance these critical dimensions of traditional financial mechanisms, as shown by a systematic review of existing literature. Design principles for new value-sensitive crypto-economic systems are emerging that suggest ways to align financial incentives in support of environmental and social outcomes. Finally, tokenization powered by blockchain serves as a means of converting illiquid infrastructure assets into tradable securities, which opens up new funding sources for sustainable projects. The results indicate that harnessing the innovation of cryptocurrency-based instruments could effectively enhance the capacity of the sustainable finance toolkit to deliver on the SDGs, but only if supportive governance frameworks and external validations are established.