BitGems has announced that it is discontinuing offering PinkCoins – the world’s first diamond backed cryptocurrency.

In January, Precious Investments Inc. announced that tokens of PinkCoin could be purchased from its wholly owned subsidiary, BitGems Asset Management, Ltd. directly at the website https://pinkcoin.bitgems.io/.

BitGems said that it has been working for the past few months to ensure a “compliant sale” of PinkCoins in all countries and regions. It noted that the vast majority of interest for PinkCoins has been from Russia (more than 80% of sales are from Russia and former Soviet block countries) with the remainder being mostly from the Far East and Latin American countries.

The company said that it has been working with council to make a case with regulatory bodies in the commodities and securities industries to ensure compliant sale. Explaining the challenges faced in the process, BitGems said:

“One challenge has been that virtually everyone we consult with in a jurisdiction gives us a different interpretation of what it is we are exactly selling and each interpretation comes with a different set of compliance requirements; this is a space that is still being defined and definitive answers are sparse and require a very significant legal cost to navigate properly.”

It further pointed out that customers in its largest market, Russia, could face serious legal repercussions for trading in cryptocurrencies. 

“Together, these two challenges have made us rethink the present viability of PinkCoins or any other cryptocurrency backed by a pool of diamonds and due to these issues we have decided to terminate the offering of PinkCoins”, BitGems said.

Those who have purchased BitGems PinkCoins from the Coinsquare exchange, a full credit will be applied to their account in the next 48 hours. If the purchase has been done from BitGems portal, buyers are required to send BitGems an email to inform if they would like to open an account with https://coinsquare.io for a credit, or send an address to get refund. If BitGems is not contacted for refund by April 1, 2016, the refund for purchases will be sent to the addresses used for making the purchase.

It concluded saying “Going forward, BitGems will be concentrating fully on developing the BitGems marketplace for the wholesale diamond industry and a component of this will be an asset backed cryptocurrency framework, but one, which we believe very strongly, can be argued without ambiguity, as a product and service crowdsale for our market members”.