Carats.io, an Israeli blockchain startup, has signed a memorandum of understanding with IDEX, an international diamond trading platform.
Under the terms of the parnership, the two entities will share data and cooperate in the development of investment options based on Carats.io’s cryptocurrency (CARAT) and diamond index (DFX).
IDEX will also serve as an escrow company for Carats.io for up to $120 million worth of diamonds. This means that it will act as a neutral third party between those selling diamonds to Carats.io – specifically, companies that operate in jurisdictions where such transactions are legal – and Carats.io itself, which issues CARAT tokens in exchange for the stones.
The CARAT token is backed by the value of diamonds – when someone buys them, Carats.io purchases the equivalent worth from the Israel Diamond Exchange. The IDE is responsible for approximately 12 percent of the global diamond trade, and it now uses the Carats.io index, the Get-Diamond Index, as its official register of stones. There are over $10 billion worth of diamonds already registered on the GDX.
IDEX, or International Diamond Exchange, is used regularly by 7,000 professional diamond traders and 1,500 diamond supplying companies. It has 750,000 diamonds in its online pool, according to the press release.
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Yearly sales of $75-80 billion
Eli Avidar, President of Carats.io, said to Finance Magnates: “The significant thing about the CARAT token is that it is not a regular cryptocurrency, but a one with a community and a well-defined ecosystem – the world of jewellery and diamonds. It is for this ecosystem that we chose IDEX, which the the second biggest platform of its type in the world.”
Gabriel Diamant, Chief Product Officer of Carats.io, said: “The most important thing that we are doing with IDEX is that it will allow a diamond trader, with the press of a button, to complete the whole process of getting a loan with real money against the value of his diamonds.”
Carats.io raised $1.6 million in a funding round in May 2018. Its aim is to open up the world of diamonds to the public by introducing liquidity into the market.
Avidar added: “The cryptocurrency world makes tokens and then creates communities which exist within the world of cryptocurrency. What we are doing is creating a financial system for an ecosystem that already exists, and is responsible for yearly sales of $75-80 billion.”
Ehud D. Cohen, Chairman of IDEX, said: “We are pleased to be cooperating with Carats.io, and to be able take advantage, on behalf of the diamond industry, of the synergies created by our two organizations working together.”
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