Diamonds As Digital Currency? How This Innovation Could Revolutionize Payments

The adoption of digital assets is rapidly transforming the financial landscape, with digital commodity currencies like Diamond Standard Carats offering innovative solutions for global payments, especially in regions with limited banking infrastructure.

As the industry evolves, the integration of these digital assets is set to impact traditional financial systems significantly.

Cormac Kinney, CEO and Founder of Diamond Standard Co., emphasizes the unique position of Diamond Standard Carats, which are classified as commodities rather than virtual currencies.

“Any platform using virtual currency is subject to existing money transmitter regulations,” Kinney explains. “Carats are subject to AML above certain amounts and can be transmitted by anyone, including a platform operator, to any other mobile phone via SMS.”

This capability allows recipients to sell the commodity for local currency without needing a money exchange license.

One of the major hurdles in the digital assets space is the regulatory challenge. However, Kinney points out that commodities have long-established trading laws.

“Platforms using Carats are commodity dealers and not money transmitters,” he says, highlighting the regulatory clarity and stability that Carats offer.

Transparency and security remain critical for digital assets. Kinney believes that while transparency is important, the necessity to trust an issuer is even more crucial.

“USDC may be transparent, but you're still trusting a third-party,” he notes. In contrast, Diamond Standard Carats are backed by physical commodities and are independently verified, reducing the need for trust in third parties.

“The title to those commodities is exclusively by the Carat holders. Unlike USDC, the system is bankruptcy-proof,” Kinney adds.

In terms of disrupting traditional financial institutions, Kinney sees Carats as offering a significant alternative.

“Carats give developers an alternative to money transmitters and, in the case of emerging markets, an alternative to money exchangers like Western Union and MoneyGram,” he explains.

Carats can be bought or sold in any retail store, simplifying financial transactions in underbanked regions.

The partnership between Diamond Standard Co. and Simplex by Nuvei is a strategic move to enhance the accessibility and usability of Carats.

This collaboration will integrate Carats into an extensive payment network, enabling users to buy Carats using credit cards, fiat, or most cryptocurrencies.

Simplex’s infrastructure will facilitate seamless value transfers and payments, making it easier for businesses and individuals to use Carats for cross-border remittances and online transactions.

Environmental considerations are also part of the conversation. Kinney points out that while digital commodities generally lack economic substance, Diamond Standard Carats involve the actual mining of natural diamonds, contributing to jobs and taxes.

This aspect of Carats adds a layer of economic value often missing in other digital currencies.

Kinney is optimistic about the future of digital commodity currencies. He predicts that Central Bank digital currencies will likely eliminate many existing cryptocurrencies through regulation.

“Carats can be sent to any mobile phone using SMS and then sold in a local store,” he says, emphasizing the practical applications of Carats in everyday transactions.

Diamond Standard Partners With Simplex To Streamline Payments

In a move that underscores the growing adoption of CARATS, Diamond Standard Co. recently announced a partnership with Simplex by Nuvei.

This collaboration will enable users to easily buy and sell CARATS using a variety of payment methods, including credit cards, fiat currency, and other cryptocurrencies.

“With this partnership, Carats are now listed on Simplex and available for onramps on leading exchanges and wallets and to the entire 350+ partner network of Simplex,” Kinney said.

“Users can effortlessly buy CARATS using credit cards, fiat, or most cryptocurrencies, and use them for easy and quick value transfer.”

For those interested in exploring the future of digital assets, the Benzinga Future of Digital Assets event on Nov. 19 will provide valuable insights into the latest trends and developments in the sector.

Kinney’s perspective on the integration of digital commodity currencies underscores the transformative potential of these technologies in the global payments industry.

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