Carats.io, an Israeli Blockchain startup, has signed a memorandum of understanding with IDEX, an international diamond trading platform which is the world's second-largest.
Escrow company
Under the terms of the partnership, 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). The CARAT token is backed by the value of diamonds.
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.
Carats.io had been linked with the Israel Diamond Exchange, but that partnership ended recently because Israel's diamond regulator did not grant Carats.io a licence to trade in diamonds, according to Reuters. Following this, the startup partnered with a blockchain-based financial platform called Celcius.
IDEX, or International Diamond Exchange, is regularly used 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.
Eli Avidar, President of Carats.io, told Finance Magnates that after leaving the IDE "a whole new world opened up for us," with its data pool of diamonds growing 30-fold as a result of its new partnerships. "None of this would have been possible under the terms of our original contract with the Israeli diamond bourse," he added.
Yearly sales of $75-80 billion
Gabriel Diamant, Chief Product Officer of Carats.io, said to Finance Magnates: "The most important thing that we are doing with IDEX and Celcius 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."
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."
Carats.io raised $1.6 million in a funding round in May 2018. It aims to open up the world of diamonds to the public by introducing Liquidity into the market.
Avidar said: "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."
