Swarm, a DeFi platform based in Berlin and regulated by BaFin in Germany, has launched a decentralized trading platform for tokenized real-world assets named “Open dOTC,” positioned as a public goods service.
Constructed on the Ethereum blockchain, this platform employs decentralized over-the-counter (dOTC) smart contracts.
These contracts have the goal of eliminating slippage, ensuring immediate settlement, and mitigating credit and counterparty risks. This is achieved through the full collateralization of trades, as indicated by the provided information.
Swarm’s tokenized U.S. treasury bond ETFs are available at the launch. The platform also has intentions to incorporate tokenized shares of publicly traded companies, such as Apple and Tesla.
Open dOTC: Navigating EU Regulations in Decentralized Trading Platform
The development of Open dOTC adheres to the clarity outlined in MiCA—the Markets in Crypto Assets regulation of the European Union, operational since June.
Swarm contends that applications meeting sufficient decentralization criteria fall outside regulatory scrutiny.
Nevertheless, the Association for Financial Markets in Europe has cautioned against excluding DeFi from MiCA, fearing potential regulatory arbitrage. Open dOTC ensures compliance with EU prospectus regulation in Liechtenstein.
This involves the requirement for tokenized assets to be issued and redeemed through wallets. These wallets are subject to know-your-customer and anti-money laundering checks. Although tokens can freely transfer between wallets, retail investors can access them without a minimum investment requirement.
Swarm’s Dual Focus: Regulated DeFi Sustainability and Community Benefits
Swarm plans to sustain its regulated DeFi trading infrastructure for users requiring such services. However, after undergoing a three-year regulatory process, Swarm now asserts a unique position in the crypto and DeFi space.
Moreover, this position acknowledges the increasing interest among regulated entities in the previously unregulated DeFi sector.
Transaction fees on Open dOTC stand at 0.25%, utilized for purchasing and burning Swarm’s Ethereum-based SMT tokens. These tokens, initially employed for trading fee discounts and liquidity rewards on Swarm’s regulated platform, will now be reduced in supply as a result of trading activity on Open dOTC.
SMT token holders stand to benefit from this reduction, establishing a community-centric aspect to the project. However, it’s crucial to note that the public goods service isn’t owned or governed formally by any entity.
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