Swarm, a leading decentralized finance (DeFi) platform regulated in Germany, has launched a permissionless trading venue for tokenized real-world assets dubbed Open dOTC. The new platform represents Swarm’s response to recent European regulatory developments regarding crypto assets.
Keypoints
- Swarm launched “Open dOTC”, a permissionless platform for trading tokenized real-world assets (RWAs)
- The decentralized platform is built on Ethereum and uses smart contracts to enable instant settlements
- Traders can access tokenized US Treasury bonds and ETFs now, with stocks like Apple and Tesla to be added later
- Open dOTC was created after regulatory clarity from the EU’s MiCA regulation regarding decentralized apps
- Swarm will continue operating its permissioned, regulated platform in tandem with Open dOTC
Built on Ethereum, Open dOTC utilizes decentralized smart contracts to enable the trading of tokenized traditional assets like stocks and bonds. The automated contracts are designed to provide instant trade executions and settlement while minimizing slippage and counterparty risks.
At launch, traders on dOTC can access tokenized US Treasury bond exchange-traded funds (ETFs). Publicly traded stocks like Apple and Tesla will be added soon, Swarm said. Users can also list any digital assets available on Swarm’s regulated exchange SwarmX for trade on dOTC.
Swarm co-founder Timo Lehes said Open dOTC aims to unlock the growing real-world asset tokenization market by providing the infrastructure required for seamless trading. He pointed to recent clarity regarding EU regulations as a prime motivator behind the platform’s creation.
????Today we announce the launch of a public goods service “Open dOTC” — a permissionless trading platform for tokenized real-world assets (RWAs).
????The platform is designed for anyone and everyone to trade and take advantage of the tokenization of #RWAs narrative that has swept…
— Swarm (@SwarmMarkets) December 13, 2023
“Adoption of tokenized assets is impeded by a lack of viable platforms where they can be traded,” Lehes explained. “We know the crypto market is bifurcating into regulated and non-regulated offerings, and we think it is imperative people have a choice of how they trade and access assets.”
Open dOTC Represents Response to EU’s Crypto Regulation
Swarm specifically cited the EU’s Markets in Crypto Assets (MiCA) regulation as providing the regulatory certainty needed to develop an open, permissionless trading venue. MiCA provides guidelines on asset tokenization and trading platforms when implemented in 2024.
The legislation notably gives decentralized apps and protocols more latitude to operate outside of regulatory purview. Open dOTC leverages this allowance by foregoing permissioning and allowing pseudo-anonymous trading via wallet addresses only.
Yet Swarm said it will continue operating its fully regulated DeFi platform in parallel with dOTC. That ensures users who prefer to trade tokenized securities within a regulated environment can still do so seamlessly.
To fund future development, Open dOTC charges a 0.25% fixed trading fee on all swaps. The fees are used to buy and burn Swarm’s native governance token, SMT, likely adding deflationary pressure. Over $8 million worth of assets are currently staked across Swarm’s permissioned offerings.
