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The diamond auction organizer Billiton Diamond, along with asset tokenization specialist Ctrl Alt, has digitized cut diamonds valued at 1 billion UAE dirhams (over $280 million) on the XRP Ledger blockchain.
The initial token release is linked to a reserve of diamonds held by various operators and mining companies in the United Arab Emirates. However, the tokens cannot yet be made available for mass sale; approval from the Dubai Virtual Assets Regulatory Authority (VARA) is required to launch the platform and expand distribution.
Billiton Diamond assures that the tokenized diamond platform will enable market participants to verify the origin, quality assessment, and ownership history of each cut stone prior to any transaction. Following the receipt of authorization from the Dubai regulator, plans are in place to facilitate the sale of tokens on the platform. At that time, the minimum sizes of diamond lots associated with each token will be established, along with their pricing, as stated by Ctrl Alt. Until the platform is developed, the tokens will be stored on the XRP Ledger. Subsequently, this blockchain from Ripple will also be utilized for issuing coins linked to the stones. Both Ctrl Alt and Billiton Diamond anticipate that tokens will eventually be traded on other platforms as well.
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Unlike the tokenization of precious metals, the tokenization of diamonds and finished gemstones has not yet achieved significant success. Typically, digital rights are issued for individual unique stones, such as those traded on the Tiamond platform of the LCX exchange. In 2018, the CEDEX project (CErtified Blockchain Based DiamondEXchange) was launched, which was marketed as the world’s first blockchain exchange for diamonds. A patented machine learning algorithm, DEX, was employed to evaluate the stones, taking into account gemological data, financial indices, and global diamond supplies. CEDEX tokens (ERC-20 on Ethereum) were intended for purchasing diamonds, shares in expensive stones, or collections of stones. However, the project did not progress to realization.
Currently, the only successful example of gem digitalization is found with Diamond Standard. This company holds a stock of small diamonds embedded in coins or bars of precious metal. Each set is appraised at a specific value and subsequently tokenized. The sets are stored in specialized vaults. In 2020, Diamond Standard received a license from the U.S. Commodity Futures Trading Commission (CFTC), and in 2021, a $50 million investment fund was established for Diamond Standard.
Over the past three months, the market for tokenized assets has experienced a growth of approximately 15%, reaching $19 billion. Additionally, the volume of tokenized goods surged by 64%, amounting to $3.5 billion.
