Israel diamond exchange to launch cryptocurrency backed by gems

Israel’s Diamond Exchange, one of the three largest worldwide, is launching cryptocurrency in what it said Wednesday is a bid to increase trade and make transactions more efficient and transparent.

The cryptocurrency, to be called Carat, is expected to hit the market around May, and will be used by investors and the general public.    

A separate one, called Cut, is being launched this week for use between dealers in a market that has often been opaque.

Blockchain technology — essentially a digitized ledger — will be used for the cryptocurrencies.

Twenty-five percent of the value of the Carat would be backed by diamonds listed on the exchange in a bid to reassure investors, said Eli Avidar, the exchange’s managing director.

That “should make it attractive in comparison to the 1,400 cryptocurrencies that exist globally,” he said. The most popular of the digital currencies has been bitcoin.

The arrangement could also help reassure skeptical regulators in Israel concerned over the potential for speculative bubbles.

The three main diamond exchanges worldwide are located in Mumbai, Antwerp and Ramat Gan, a city located east of Tel Aviv.

Israeli exports of rough and polished diamonds amounted to some $7 billion in 2017.

The Israeli exchange also launched a “get.diamonds” index in recent days that serves as a reference and reflects daily market fluctuations.

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