Swarm, a Berlin-based DeFi platform regulated by Germany’s BaFin, has launched “Open dOTC”, a permissionless trading platform for tokenized real-world assets, as a public good service.
Built on Ethereum, the platform utilizes decentralized over-the-counter (dOTC) smart contracts. These contracts are designed to minimize credit and counterparty risk by eliminating slippage, ensuring prompt settlement and fully securing transactions, according to the statement.
Swarm’s tokenized U.S. Treasury ETF will be available at launch, and the platform plans to add tokenized publicly traded stocks such as Apple and Tesla.
“The adoption of tokenized assets is hindered by the lack of a viable platform to trade them,” said Swarm co-founder Timo Lehes. “The launch of this public good service means more people can take advantage of the explosive RWA story in 2023.”
Built with MiCA clarity
Swarm said Open dOTC is built on the clarity of MiCA, the European Union’s cryptocurrency asset market regulation that came into effect in June. Swarm argued that sufficiently decentralized applications do not fall within the purview of regulators. However, European trade body the Association for Financial Markets in Europe warned in July against excluding DeFi from MiCA, arguing it could open opportunities for regulatory arbitrage.
The platform ensures that tokenized assets comply with Liechtenstein’s EU prospectus regulations, ensuring they are issued and redeemed from wallets that have passed know-your-customer and anti-money laundering checks, Swarm explained. However, he said, “Tokens can be freely moved between wallets, and even general investors can access them without a minimum investment amount.”
Swarm added that it will continue to operate a permissioned platform for those who need a regulated DeFi trading infrastructure.
“Swarm has been going through the regulatory process for three years, which puts us ahead of most players in this space,” added Swarm co-founder Philipp Pieper. “We know there is an entire cryptocurrency and DeFi ecosystem that believes in permissionless infrastructure, and Open dOTC was designed with this in mind. “Innovation has occurred in the hitherto unregulated space of DeFi, and now regulated entities are taking advantage.”
SMT supply decline
Open dOTC’s transaction fees are set at 0.25% and are used to purchase and burn Swarm’s Ethereum-based SMT tokens. This was previously used as payment for trading fee discounts and liquidity rewards on Swarm’s licensed and regulated platforms.
Lehes said SMT token holders can benefit from Open dOTC’s trading activity and “effectively mark it as a community-owned project.” However, since public good services are not owned or managed by anyone, potential benefits may be derived from a reduction in the supply of Smart Media Tokens rather than from formal community ownership or governance programs.
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