Diamond Standard Co. Introduces CARATS: Blockchain Payments System Backed by Tokenized Diamonds

Diamond Standard Co. has launched CARATS, a blockchain payment system that uses tokenized diamonds as backing collateral for transactions. This innovative approach aims to bypass the regulatory hurdles faced by traditional payment services and centralized exchanges. CARATS allows users to purchase, trade, transfer, and cash out tokenized diamond assets, or even exchange them for physical diamonds. The system mints physical coins and bars encrusted with diamonds, integrating a chip to audit and broadcast the tokenized assets on the blockchain. By operating as a receipt for a physical commodity rather than a traditional cryptocurrency, CARATS avoids the need for multiple money transmitter licenses, thereby sidestepping regulatory complications. This contrasts with platforms like Elon Musk’s X, which must acquire numerous licenses to operate as a money transmitter. CEO Cormac Kinney highlighted the advantages of CARATS, especially in providing financial services to the unbanked. The company believes this model can prevent pitfalls experienced by centralized exchanges that still faced regulatory issues, such as FTX.