Trillion US dollar market: Coinbase opens with "Project Diamond" new crypto platform

• Project Diamond enables tokenization of real-world assets on the blockchain
• The first digital debt instrument has already been issued, distributed and matured as a test
• Tokenized assets could become a multi-trillion market

Project Diamond

With Project Diamond, Coinbase Asset Management is launching a smart contract-based platform that enables institutions to seamlessly create, buy and sell digital native assets, Coinbase explains in a press release. The platform uses the Coinbase technology stack and the Base, an Ethereum Layer-2 blockchain, to “enable secure, legally compliant capital market activities that will further advance the institutional acceptance of the global crypto economy,” according to the company statement. Coinbase aims to bridge the gap by promoting institutional use of the next generation of financial technology. Currently, less than 0.25 percent of global assets are represented on the blockchain infrastructure, which means that significant efficiency gains remain unused.

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“We are starting to tokenize real-world assets on the blockchain in a regulated way,” explains Coinbase CEO Brian Armstrong via X.

We’re starting to tokenize real world assets in a regulated way onchain. https://t.co/2vT0zCV0Vx

-Brian Armstrong??? (@brian_armstrong) December 13, 2023

The project is currently aimed exclusively at institutional users outside the USA. The Financial Services Regulated Activity (FSRA) of the Abu Dhabi Global Market (ADGM) has granted Project Diamond preliminary approval to carry out regulated activities in the area of ​​financial technology services development in the RegLab.

First debt instrument

As a test, the first digital debt instrument was successfully issued, distributed and made due on the platform on November 10th. This was intended to demonstrate the technical feasibility to the FSRA as it prepares to join the ADGM RegLab sandbox. While this on-chain financial activity reflects the extensive flow of debt securities that powers businesses in the traditional financial sector worldwide, the settlement of the digital discount note, based on USDC, occurs within a single use case with near-instantaneous settlement speed on the Base platform, Coinbase continued explained. This transaction represents a significant improvement in operational efficiency and simplifies a significant financial process, thereby further facilitating institutional participation in the crypto economy.

“Coinbase Asset Management is building Project Diamond to enable a future where institutions can create, distribute and manage a broad range of digitally native assets directly onchain. As we journey, we seek world-class partners to join us in the future of the global financial system. Together we will scale finance like software,” says the press release.

Tokenized assets: multi-trillion market

The fusion of cryptocurrencies and traditional asset classes, including fiat currencies, stocks, treasuries and real estate, is currently experiencing unprecedented growth, as asset manager 21.co explains. Blockchains will therefore become a fundamental infrastructure for every asset class, creating use cases that go beyond our imagination, the asset manager thesis. In the next few years, the market for tokenized assets is expected to develop into a multi-trillion market, according to the forecast. 21.co estimates that by 2030 the market value for tokenized assets will be between $3.5 trillion in a bear scenario and $10 trillion in a bull scenario. The market value is derived from the estimated penetration rate of the entire addressable market across various asset classes, including non-financial corporate debt, real estate funds, private equity, securities collateral, trade finance and public debt.

Editorial team finanzen.net

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