One of the globe’s largest diamond centers, Israel’s Diamond Exchange, is set to launch two new digital currencies in the coming weeks designed to build anonymity and create a less-transparent trading arena for investors.
Subscribe to the Bitsonline YouTube channel for great videos featuring industry insiders & experts
The first coin, known as the “Cut”, will be available to dealers. Traders will receive digital wallets after being given background clearance, and transactions can be verified within a matter of minutes – a major attraction for most crypto and precious gem fans.
“Transfers of money have become increasingly difficult,” said one anonymous dealer. “With banking regulations, even the smallest move becomes complicated.” He suggested that the process is something of a catch-22, as “buyers don’t want to give the money until they get the stone, and sellers don’t want to give the stone until they get the money.”
Additionally, all Cut transactions are supposed to be completely private, keeping both dealers’ and receivers’ identities a secret. At press time, there are no plans for regulation, and a spokeswoman for the Economy Ministry has not confirmed any scheduled discussions regarding how the coins can or should be monitored. Pre-sales of the Cut began last Monday, and the coins are expected to hit trading markets in the coming weeks.
The second asset, called the ‘Carat’, is designed for retail investors seeking to invest in diamonds without taking physical possession of them.
“We are creating a way for people to invest in the market without actually buying and selling diamonds,” said Avishai Shoushan, CEO of CARATS.IO and original creator of the coins.
The ideas behind both Cut and Carat trading sound solid enough, but not everyone is rejoicing.
A recent report by the Justice Ministry says that transactions in Israel’s Diamond Exchange are often the subject of widespread speculation, as they are typically carried out through a simple “shake of a hand” and minimal documentation.
Anonymity is an important aspect of Exchange transactions; thus, officials of both the Europol and the FBI are often seen frequenting the Exchange in search of evidence of money laundering and other criminal activity.
In addition, several banks and financial institutions have either limited or fully ended credit relations with the Exchange due to what they call “narrow profit margins between rough and polished gems.”
And while some feel that the introduction of digital currency to the Exchange could make things easier in the long run, not everyone is convinced.
Managing director of the Exchange Eli Avidar, for example, is all for the implementation of the Cut and Carat entities in diamond transactions.
“We foresee alignment,” he confidently stated. “This industry is facing challenges, and this is going to, in a lot of aspects, address those challenges… The profitability element of the business, the speed of doing business, money laundering aspects and the problematic elements of banking, nowadays.”
Martin Rapaport, on the other hand, serves as chairman of the influential Rapaport Group. The company’s diamond price list is widely considered a global industry benchmark, and he considers cryptocurrencies to be a “bit of a fad” that aren’t likely to add anything to the mix.
“Diamonds have an inherent value,” he explains. “And that inherent value has been around for centuries. Whether you can take that and hype it into something modern and something interesting like a cryptocurrency is highly questionable.”
Can digital currency enhance something as long-lasting as the diamond industry? Post your comments below.
Images via Pixabay, Israel 21 C