The Israel Diamond Exchange (IDE) has terminated its partnership with Carats.io because the cryptocurrency company did not have regulatory approval, both organizations told Rapaport News.
The IDE has required Carats.io to cease all public displays of association with the bourse and its Diamond Tech Innovation Center, exchange president Yoram Dvash said in a note to IDE members last week. The bourse has also asked the company to stop any activities on the trading floor or its online platforms, Dvash added.
Dindex, Carat.io’s parent company, applied for a license earlier this year from the diamond controller, the regulator for the Israeli industry, a spokesperson for Carats.io said Monday. That bid was unsuccessful.
“The decision of the [IDE] has been reached following, among other things, letters sent by the Israeli controller of diamonds denying the company’s request for a license to trade in diamonds,” a spokesperson for the exchange said in a statement Tuesday.
Carats.io, which operated out of the IDE’s innovation center, is developing digital coins that, until now, had been backed by diamonds the company buys at the Israeli bourse. It has also launched a daily diamond-price index, GDX, using data from trading at the IDE.
“The diamond controller’s decision was based on the current lack of regulations concerning digital currencies,” Carats.io said. “We anticipated the diamond controller’s decision when we first filed the request in February 2018.”
Following Carats.io’s exit from the IDE, the company will operate internationally rather than exclusively on the Israeli exchange, it said. The previous agreement required it to buy diamonds to back its currency on the Israel bourse alone, and its index was based purely on diamonds traded at the Ramat Gan center.
“Now Carats.io will purchase diamonds wherever it chooses and on terms that suit the company,” the spokesperson said. Its index will also become international, and will take into account broader data, the company noted.
The firm has also moved to new offices in Tel Aviv, and last week unveiled former IDE managing director Eli Avidar as its new president. The company received $1.6 million from Net Capital Ventures last month to support the business.
Image: Carat.io’s display at International Diamond Week in Israel, February 2018. Credit: Three Photographers