As digital currencies have become attractive investment channels in recent years, The Israel Diamond Exchange (IDE), together with start-up Carats.io, will develop a financial instrument for digital investments, the exchange announced yesterday. 

IDE has signed an agreement with Carats.io to launch a digital currency backed by diamonds named CDC – Carats.io Diamond Currency. “The start-up specialises in Big Data solutions for the precious gems and diamond industries,” IDE added.

Only purchasable on the Israel Diamond Exchange, the new digital currency will be based solely on investments in diamonds bought. “Trading in this currency will be based on an index that reflects activity within the Israeli Diamond Industry,” IDE announced. 

The IDE sees this as one way of boosting trade within the bourse. 

IDE President Yoram Dvash commented: “For the past several years there have been many attempts to turn diamonds into a viable financial instrument, but none have succeeded. We believe in order to achieve this it is essential to bring in parties from outside the diamond world, as part of the Innovation Center which we have established in the Diamond Exchange. Bringing new investors to the diamond sector in Israel is important for the local industry and for the country. We intend to make use of the incredible expertise that Israel’s high tech industry offers.”

A representative of Carats.io said: “The diamond industry can be an attractive investment channel for the many investors in digital currencies. This currency is unique as it will be backed by investments in diamonds, which have steadily appreciated over time. There is a large community of investors in digital currencies throughout the world. By backing this currency with diamonds we are significantly decreasing the speculative level of the investment. Our cooperation with the Israel Diamond Exchange is an important step in making this currency a reality.”

According to a report in The Financial Times some  leading banks – including Credit Suisse, Barclays, HSBC -- have come  together “to launch a new form of digital cash for clearing and settling financial transactions in 2018”, IDE noted, underlining  its plans.