Today, less than 0.25% of total global assets are “represented on blockchain infrastructure, leaving massive efficiency gains uncaptured,” according to an update from Coinbase (NASDAQ:COIN).
Coinbase says that its goal is “to close this gap by enabling institutional use of next-generation financial technology.”
Project Diamond is described as “a platform to create, buy, and sell digitally native assets leveraging the power of the Coinbase technology stack and Base, an Ethereum layer-2 blockchain.” The asset will be more traditional, regulated categories – or securities.
On November 10, the first digital debt instrument on Project Diamond was “successfully issued, distributed, and matured on the platform as a technical demonstration of feasibility to the Financial Services Regulatory Authority as it prepares to join the ADGM RegLab sandbox.”
While this onchain financial activity mirrors the massive flow of debt instruments that power global companies in traditional finance, the digital discount note, denominated in USDC, was transacted “within a single application at near-instant settlement speed on Base.”
The transaction marks a powerful upgrade “to operational efficiency; a simplification of an important financial process that further unlocks institutional participation in the cryptoeconomy.”
Coinbase Asset Management is building Project Diamond to “enable a future where institutions can create, distribute and manage a wide range of digitally-native assets directly onchain.”
On their journey, they seek partners to join them in “imagining and creating the future of the global financial system.”
Together, they will aim to “make finance scale like software.”
As noted in the update, Coinbase Asset Management, LLC claims it is “a leading institutional digital asset manager, “delivering investment strategies and infrastructure to bridge digital and traditional markets.”
Coinbase AM says that it has deep expertise in trading and investing “across digital and traditional asset classes. Our solutions are calibrated to remove barriers and promote institutional engagement in digital assets subject to fiduciary standards.”
As mentioned in the announcement, Project Diamond is being “developed by Coinbase AM and initial use cases will be for registered institutional users outside the U.S. only.”
Project Diamond harnesses “the power of the Coinbase technology stack: Coinbase Prime custody, Web3 Wallet, the Project Diamond platform, and USDC, all connected to the Base layer-2 blockchain.”
Project Diamond has received in-principle approval “from the Financial Services Regulated Activity (FSRA) of Abu Dhabi Global Market (ADGM) to conduct the regulated activity of Developing Financial Technology Services within the RegLab.”