If one door closes, another door opens. That’s what happened in mid-December in Abu Dhabi for Coinbase. Binance had recently left the region. Coinbase moved in with RWA or real-world assets.
Their ‘Project Diamond’ brings TradFi assets on-chain. All this with the approval of local regulators in Abu Dhabi. So, let’s take a closer look at this ‘Project Diamond’ by Coinbase.
What Is Project Diamond?
Project Diamond brings native assets on- chain and in reach for institutions. This allows institutions to create and trade in various financial instruments. For example, debts. Coinbase uses their L2 rollup solution, Base, for this.
📰 Coinbase's focus on asset tokenization@coinbase has launched Project Diamond, aimed at enabling institutions to create and trade digital tokens, marking a potential shift towards greater tokenization of assets in the financial sector.
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— DigiFT (@DigiFTTech) December 28, 2023
Coinbase keeps everything in-house, by using their own tech-stack. This includes Base, their Prime custody service, and their Web3 Wallet. The USDC stablecoin by Circle is also part of the project. Combined, they create a capital marketplace. Smart contracts will power Project Diamond.
However, all this also happens in a regulated manner. There’s an in-principle approval from Abu Dhabi’s regulatory platforms. That’s the Financial Services Regulated Activity (FSRA) of Abu Dhabi Global Market (ADGM). A demonstration for Abu Dhabi regulators was already conducted on 10th November 2023. This demonstration allowed the project to enter the Abu Dhabi Global Market RegLab.
In turn, this allows the project to enter the RegLab’s sandbox. This offers a regulated environment. It allows for developing and testing new and innovative FinTech solutions. Part of the teams’ demonstration also saw the first debt instrument. The Coinbase team issued a USDC stablecoin short-term discount note.
The Future of RWA
Estimates have the RWA market reaching $10 trillion by 2030. Let’s put this in perspective. Currently, global assets only have a 0.25% on-chain representation. This opens the potential for a massive RWA on-chain market. For example, it offers,
- Faster settlements.
- It is cheaper to operate.
- More transparent compared to old style finance.
The possibilities seem endless. For instance, existing assets like stocks can get tokenized. This would allow for a user inflow outside TradFi and its markets. This makes it quite possible to reach that $10 trillion market by 2030.
We're starting to tokenize real world assets in a regulated way onchain. https://t.co/2vT0zCV0Vx
— Brian Armstrong 🛡️ (@brian_armstrong) December 13, 2023
To sum up, Project Diamond will bridge this gap. It will be one of the many solutions to come. RWA projects could be in the spotlights during 2024, and stay there, all the way towards 2023. It is part of a competitive market, with global banks and crypto projects aiming to bring RWA on-chain.
Disclaimer
The information discussed by Altcoin Buzz is not financial advice. This is for educational, entertainment and informational purposes only. Any information or strategies are thoughts and opinions relevant to accepted levels of risk tolerance of the writer/reviewers, and their risk tolerance may be different from yours.
We are not responsible for any losses that you may incur as a result of any investments directly or indirectly related to the information provided. Bitcoin and other cryptocurrencies are high-risk investments, so please do your due diligence.
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