Dubai: Al Kasir Group on Sunday launched an Initial Crypto-asset Offering (ICAO) backed by diamonds and other gemstones.
Sunday’s ICAO is the latest in a number of crypto assets that have been backed by physical commodities, including Venezuela introducing a cryptocurrency backed by oil and one launched by UK’s Royal Mint, which is backed by gold.
Al Kasir Group, which has a jewellery trading licence, said their crypto assets will be available for purchase on their online platform with a bonus on its private ledger or blockchain backed by Ethereum. The investments could be done from a minimum of $250 (Dh912) to $250,000 against which diamonds certified by Indian Gemological Institute will be given on completion of the ICAO.
“This is an asset which is backed by real diamonds, and the client will get a bonus asset on his wallet which he can redeem after August 15,” Dr Amit Lakhanpal, Director of Dubai-based Al Kasir told journalists.
“We have a jewellery trading licence. We have just adopted blockchain technology to improve our sales. We are not into crypto currency ... we have a private blockchain and whatever is issued by the blockchain will be taken back by the company and for that we don’t need the central bank’s approval,” Lakhanpal said, when asked about details on his company’s licence.
This is the first time a company has issues an ICAO in the UAE. Al Kasir said since their offering is asset-backed, it is different from an ICO. Previously, the UAE’s Securities and Commodities Authority (SCA) in a circular sent in early February that ICOs are highly speculative and highly volatile in terms of prices. “Some ICOs are not regulated and thus may be subject to fraud risks. ICOs may be issued abroad, and therefore are subject to foreign laws and regulations that can be difficult to verify. Tracking and recovering funds in case of ICO collapse may prove to be extremely difficult in practice,” SCA said on its website.
They also added that they don’t recognise, regulate, or supervise any ICO presently and may not offer any legal or regulatory protection.
“The ICO market needs to be regulated so that there is a track of fund utilisation in order to safe guard investor interest. Until that happens, investors should be very cautious in investing in ICOs as it’s a high-risk investment,” said an analyst with Capital TA, who did not wish to be named due to the sensitivity of the matter.
Initial Coin offerings (ICO) fund raising surged to $6.8 billion (Dh25 billion) in 2017 from $151 million in 2014, 2015 and 2016 combined.