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Antwerp diamond trade turns to fintech platforms

Diamonds love Antwerp.

At least, that is the official slogan of the Antwerp World Diamond Centre (AWDC), the public/private company (it's part government-owned) that oversees the diamond trade in Antwerp, Belgium, the world's leading city for buying and selling the stone. In 2014 some $59 billion worth of diamonds (in USD) were brought into or exported out of Antwerp—more than 5% of the GDP of Belgium. The AWDC serves as a watchdog for the industry, sets standards and promotes the market, and has a commercial arm that counts all the world's leading diamond dealers as members.

But lately, the global market doesn't love diamonds. Sales declined across the board last year, and Antwerp saw its own trade volume fall some 18%, from $59 billion to $48.3 billion. (AWDC points out that "competitors such as India and Israel endured much steeper declines.")

To address the diamond downturn, AWDC is turning to unlikely partners: fintech startups. It announced today a "pilot project" with San Francisco-based Uphold and Belgium-based FX4BIZ. Both are payment platforms that allow for fast and free conversion between many different currencies, including fiat and virtual currency, and commodities.

"We, as the industry’s representative organization, are always searching for new technologies and ways to distinguish ourselves from our competitors," said AWDC CEO Ari Epstein in a statement. Last year the AWDC held a diamond investment symposium with Morgan Stanley (MS), and Epstein says the two new partnerships are a result of the symposium.

For Uphold, which markets itself as a sort of cloud-money vault, this deal brings not just financial potential, but the legitimacy of a global market partner to a still-nascent platform that rebranded at the end of last year. Uphold launched in 2014 as BitReserve, and originally customers needed to deposit funds in the virtual currency bitcoin. They could convert money into dollars, pesos, francs, and other currencies or even precious metals, but they had to start in bitcoin. That is no longer the case, and Uphold dropped the "bit" from its name, seemingly to distance itself from the controversy and stigma of the digital coin.

The web site now allows for conversion into 23 different fiat currencies (including dollar, euro, pound, shekel, rupee, and yen), plus four metals (silver, gold, palladium and platinum) and bitcoin. About $836 million in transactions has been moved around on Uphold, with $85 million currently held in Uphold wallets.

"Some of the legacy players in this space are very focused on specific virtual currencies," says Uphold CEO Anthony Watson, likely referring to bitcoin, "but... I predict in the next 5-10 years virtual currencies will become vertical to support vertical businesses and industries. If you look at our platform, we deal in all forms of currency. We'll support any and all types of value that the market supports."

Watson, a former chief information officer at Barclays (BCS) and then at Nike (NKE), surprised many when he left to join Bitreserve. Its founder, Halsey Minor, a founder of technology news site CNET, brought Watson on for his banking experience, then made him Uphold's CEO after only a few months. Watson has said he hopes Uphold can serve to level the financial playing field, bringing banking service to the unbanked and underbanked.

Thanks to the AWDC partnership, "We get to showcase our platform in something that hasn't been done before," he tells Yahoo Finance. As for AWDC, "They needed a real-time platform that allows for payment processing and clearing for their traders and dealers." Uphold says using its platform will save diamond traders "tens of millions of dollars each year." As a result of the partnership, Uphold is also opening a new office in Antwerp.

AWDC will encourage its member companies, which in turn have relationships with some 2,000 diamond dealers around the world, to use Uphold or FX4BIZ for their banking services, foreign exchange and money transfer services. The value proposition of these startups is that they allow for the conversion and transmission of funds much faster and cheaper than traditional wire transfer. Whether diamond traders will hop on board is a different question.


Daniel Roberts is a writer at Yahoo Finance, covering sports business and technology. 

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