Israel diamond exchange (IDE) announced the launch of two digital currency, which they believe will breathe new life into the market and will make trade more efficient and transparent.
Two new cryptocurrencies are provided with precious stones, the first of them, called “Cut”, was launched last week for use in transactions between dealers in the diamond market.
In a recent report of the Ministry of justice of Israel has noted that the current transaction on the diamond market “are often run anonymously from hand to hand and with minimal documentation”. This opacity has attracted particular attention of the FBI and Europol to the diamond trade, as a possible means of money laundering and financing of crime. A small profit between faceted and not faceted stones makes it difficult to cutting and polishing companies access funds, and banks have reduced or completely stopped lending to diamond faceting. Supporters of the digital currency believe that it will help solve some of these problems.
“We expect the orientation to this currency as it improves the situation,” said Eli Avidar, managing Director of the exchange. “Our industry faces challenges, and this will largely allow us to solve them…”. Cryptocurrency Cut will only be available to registered clients of the IDE. Traders after verification will receive their e-wallets, and every transaction is protected and publicly available thanks to the technology of the blockchain, the identity of the perpetrators of the deal, will be hidden. The exchange will be able to provide information about persons who committed a particular transaction to regulators, according to official request.
One of the diamond traders, wished to remain not public said: “Bank transfers becomes more difficult. Banking regulation complicates even the small trades, and sometimes takes a few days. In turn, the buyers do not want to pay money until I get the stones, and the sellers do not want to give the stones until you get the money”.
The second digital currency — the “Carat” will appear later and will provide institutional and retail investors, who can invest in the diamond market, without buying actual diamonds. “We offer people the opportunity to invest in the market without actually buying and selling diamonds,” said Avishai Shushan, head of CARATS.IO.