Regulated DeFi platform Swarm has launched its permissionless platform for trading tokenized real-world assets, known as “Open dOTC”.
The Berlin-based BaFIN regulated DeFi company launched the platform as a public good. Built on the Ethereum blockchain, Open dOTC uses decentralized over-the-counter (dOTC) smart contracts which eliminate slippage, ensure instant settlement and minimize credit and counterparty risks by fully collateralizing trades, a statement said.
Commenting on the launch, Swarm co-founder Timo Lehes said the platform will eliminate the lack of reliable trading destinations for tokenized assets and thus boost the growth of the industry.
“Adoption of tokenized assets is impeded by a lack of viable platforms where they can be traded,” Swarm co-founder Timo Lehes said. “The launch of this public goods service means more people can take advantage of the RWA narrative that has exploded in 2023.”
The demand for tokenization has been on the increase since the explosion of non-fungible tokens in 2020. Players in the mainstream sectors are finally realizing that tokenization could be the way to go as blockchain adoption is becoming the norm.
By launching Open dOTC, Swarm is positioning itself as a leader in the tokenized real world assets industry and could become a reference point in the near future.
Swarm’s tokenized U.S. treasury bond ETFs are available at launch, with the platform planning to add tokenized publicly traded stocks such as Apple and Tesla in the near future to give users more variety to choose from.
Aided by MiCA
One of the major challenges facing the crypto industry and particularly blockchain in general is the lack of clarity when it comes to regulation. The trend is clear in countries like the U.S where the industry has no direction and is being tossed on every side by regulators, which explains why the industry is dying in the country.
Markets in Crypto Assets (MiCA) regulation in the European Union has solved the problem of lack of clarity and is the inspiration behind the launch of Open dOTC, according to Swarm.
MiCA makes it clear that sufficiently decentralized applications do not fall under regulators’ purview. This gives developers with ideas of genuinely decentralized applications to thrive, as they pose lower risks to users.
Also to ensure compliance with EU prospectus regulation in Liechtenstein, Swarm ensures that tokenized assets are only issued to and redeemed from wallets that have passed know-your-customer and anti-money.
“Swarm has been in the regulatory process for three years so we have had a head start on most players in the space,” Swarm co-founder Philipp Pieper added.
“We know there is a whole crypto and DeFi ecosystem that believes in permissionless infrastructure and Open dOTC has been designed with them in mind. To date, innovation has happened in the largely unregulated area of DeFi, which regulated players are now taking advantage of.”
The Need for Clear Regulation
The crypto and blockchain industry continues to face regulatory challenges the world over, mainly because most jurisdictions don’t have clear guidance for industry players to follow.
If other jurisdictions can follow the pattern of the European Union, it will go a long way in bringing the good aspects of the technology into the mainstream. Lack of clarity on the other hand can lead to the loss of good technological innovation.