Swarm Launches Permissionless Trading Platform for Tokenized Real-World Assets
Swarm, a DeFi platform based in Berlin and regulated by BaFin in Germany, has introduced “Open dOTC,” a permissionless trading platform for tokenized real-world assets. The platform, built on Ethereum, utilizes decentralized over-the-counter (dOTC) smart contracts to ensure instant settlement, eliminate slippage, and minimize credit and counterparty risks. Swarm’s tokenized U.S. treasury bond ETFs are currently available on the platform, with plans to add tokenized publicly traded stocks such as Apple and Tesla. According to Swarm co-founder Timo Lehes, the launch of this public goods service will enable more individuals to benefit from the growing narrative of tokenized assets.
Built on MiCA Clarity
Open dOTC was developed following the European Union’s Markets in Crypto Assets (MiCA) regulation. Swarm claims that applications that are sufficiently decentralized do not fall under regulatory oversight. However, the Association for Financial Markets in Europe cautioned against excluding DeFi from MiCA as it could create opportunities for regulatory arbitrage. Swarm ensures compliance with EU prospectus regulation in Liechtenstein by issuing and redeeming tokenized assets from wallets that have undergone know-your-customer and anti-money laundering checks. The tokens can be freely transferred between wallets and accessed by retail investors with no minimum investment amount.
Continued Operation of Permissioned Platform
While launching Open dOTC, Swarm will continue to operate its permissioned platform for those who require regulated DeFi trading infrastructure. According to Swarm co-founder Philipp Pieper, the company has been involved in the regulatory process for three years, giving it an advantage over other players in the space. Open dOTC has been designed with the goal of providing permissionless infrastructure for the crypto and DeFi ecosystem.
Trading Fees and SMT Tokens
Trading fees on Open dOTC are set at 0.25% and are used to purchase and burn Swarm’s Ethereum-based SMT tokens. Previously, these tokens were used for trading fee discounts and liquidity rewards on Swarm’s permissioned and regulated platform. According to Timo Lehes, SMT token holders will benefit from trading activity on Open dOTC, leading to a reduction in the token supply. However, there is no formal community ownership or governance program for the public goods service, as it is not owned or governed by anyone.
Hot Take: Expanding Access to Tokenized Assets
Swarm’s launch of the permissionless trading platform Open dOTC aims to address the lack of viable platforms for trading tokenized assets. By utilizing decentralized over-the-counter smart contracts on Ethereum, the platform eliminates slippage, ensures instant settlement, and minimizes credit and counterparty risks. This move allows more individuals to participate in the rapidly growing narrative of tokenized assets. However, questions remain regarding the regulatory framework surrounding DeFi platforms like Open dOTC, as excluding them from regulations could create potential loopholes. Nevertheless, Swarm’s long-standing involvement in the regulatory process positions them as pioneers in the space.
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