Coinbase’s Project Diamond: New blockchain debt instruments

Coinbase Asset Management launches Project Diamond, a platform for institutional investors to issue and trade blockchain-based digital debt instruments.

Developed by Coinbase Asset Management and utilizing its Ethereum scaling network, Base, Project Diamond integrates several vital components. These include Coinbase Prime’s custody service, the exchange’s web3 crypto wallet, Circle’s USDC stablecoin, and the layer-2 network Base. Together, these elements forge a capital marketplace that operates entirely on the blockchain.

Gaining in-principle approval from the Financial Services Regulated Activity of Abu Dhabi Global Market, Project Diamond has already made strides by issuing and distributing its first debt instrument. This initial offering, a short-term discount note denominated in USDC stablecoin, was executed on Base, showcasing the platform’s capabilities to Abu Dhabi regulators.

Currently, Project Diamond is accessible to registered institutional users outside the United States. This launch comes amid intense competition to integrate traditional financial assets like bonds and credit into blockchain systems. This process, known as the tokenization of real-world assets (RWAs), is believed to enhance settlement speeds, reduce operational costs, and increase transparency.

By 2030, the market for tokenized RWAs is projected to reach $10 trillion, according to asset management firm 21.co. Project Diamond distinguishes itself by creating digitally native assets directly on the blockchain, a significant evolution from merely creating token versions of existing instruments.

Shaun Martinak, Head of Infrastructure Development at Coinbase Asset Management, emphasizes the advantage of this approach, noting the efficiency of creating and maturing assets entirely on-chain. Coinbase aims to bridge the gap in global assets not currently represented on blockchain infrastructure, which stands at less than 0.25%.