Amidst the chaos of last weekend’s bank failures and the massive shutdown of stablecoins, investors have found solace in a surprising asset class: tokenized diamonds.
When market volatility peaked, reports CoinDesk shows that digitized diamond sales have skyrocketed by 300%, with the Diamond Standard market leading the way.
Founder and CEO Cormac Kinney confirms that the surge in trading volume was so significant that the Diamond Standard spot market remained open continuously.
Notably, according to the CEO, most of those who bought these diamonds wanted to get stablecoins. He quoted that,
“[Продажі] of diamond coins and other products have risen sharply since Friday due to the shutdown of Silicon Valley Bank and Signature Bank by regulators, the USDC breaking the peg [долару], and due to fears of the infection spreading to other banks and digital assets. .”
The popular USDC stablecoin has restored its pegged price of $1 after regulators in the US assured that investors in Silicon Valley Bank (SVB) can access their money.
USDC is the fifth largest coin and the second largest stablecoin by market cap at $37 billion, while Tether (USDT) ranks third among all cryptocurrencies and first among stablecoins with a market capitalization of $76 billion.
Diamond Standard, based in New York, is a blockchain company that describes itself as a technology developer, diamond market maker and “manufacturer of the world’s first diamond goods”.
The company has tokenized the diamond market, which allows investors to easily invest in this mineral.
“Our goal is to unlock the potential of natural diamonds as valuable assets for investors, like gold, silver and platinum,” the company said, adding that it is working with regulators, auditors and financial sponsors to do so.
Having these investment options is especially important in times of market volatility and uncertainty, when investors tend to focus on hard assets to protect them.
In addition, the CEO said that most clients who work with the company are looking to hold the asset for the long term, seeing it as an opportunity for portfolio diversification and hedging.
The company’s clients include individuals, family offices and small hedge funds, and many of them have gold in their portfolios, seeing “diamonds as something that is not tied to other assets.”
Also, there may be an opportunity for diamond prices to rise and for investors to make money.
Interestingly, Diamond Standard is still primarily banking with Signature Bank , while having business deals with several others, the report noted. Kinney argued that Signature is currently the “safest bank in the world,” given that the newly created interim entity will be managed for a time by the Federal Deposit Insurance Corporation ( FDIC ) .
We will remind you that the upheavals in the banking industry have currently led to the bankruptcy of three large banks in the USA: Silvergate SVB and Signature Bank.
The FDIC took control of Signature two days after regulators shut down SVB last weekend in a massive collapse that affected billions in deposits.
According to the Department of Financial Services of New York State, as of the end of 2022, Signature had $110.36 billion in assets and $88.59 billion in deposits.
Signature’s collapse was the third largest failure in US bank history, the closing of Silicon Valley Bank was the second, and the first was Washington Mutual which collapsed during the 2008 financial crisis.
Along with the troubled Silvergate, Signature Bank was known as one of the largest cryptocurrency banks in the US.