Swarm Markets launches BaFin-regulated decentralized trading exchange

Rick Steves

Swarm Markets uses smart contracts for its transaction protocol in order to give rise to more trading pairs and ‘legos’

Swarm Markets has launched with over $15 million pledged from more than 250 individuals signed up to its liquidity provider programme.

Integrating new capital, market participants, and assets will allow Swarm Markets to offer tokenized securities that can be traded alongside crypto assets in one regulated and liquid environment.

The decentralized trading exchange (DEX) operates under regulatory license from the Federal Financial Supervisory Authority (BaFin) in Germany.

Swarm Markets operates on the following provisional licenses under the German Banking Act (KWG) provided to Swarm Capital GmbH: Commission Business; Agent Broking; Trading on own account; and Custodian Business.

Regulation is seen as one of the biggest barriers to mainstream institutional crypto adoption because of the counterparty verification requirements.

Swarm Markets addresses ID verification issues using AML and KYC protocols typical to regulated platforms, allowing all participants to be verified, removing counterparty risk, whilst remaining private.

Philipp Pieper, Co-founder of Swarm Markets, said: “We’ve seen the total value locked in DeFi grow exponentially since the DeFi summer of 2020. People are looking for ways to make their collateral work for them but need to operate in a trusted and secure environment that suits their compliance needs. That’s where Swarm Markets comes in.

“We see regulation as necessary for the evolution of DeFi as opposed to it being a limiting factor. Instead of reinventing the wheel, we’ve applied existing German regulation to DeFi markets. This regulatory layer will give enough assurances and protections to allow capital and assets into the ecosystem that have been sitting on the sidelines for too long.”

Swarm Markets co-founder, Timo Lehes, commented: “We find ourselves in a perfect storm where interest rates are historically low and people’s assets are not being put to good use. It’s accepted there are certain advantages of moving trading business onto the blockchain but asset owners are concerned with counterparty risk and compliance.

“Tokenization can help you do more with idle assets. By bringing real-world assets onto the Blockchain, the collateral value generates more yield for asset owners⁠—the amount of liquidity pledged in our launch provider programme is testament to this. Through our licensed protocol we can bring new assets onto the Blockchain, expanding the current DeFi ecosystem by 10-100X.”

Customers will enjoy full custody of collateral as they pursue their trading strategies. Swarm Markets uses smart contracts for its transaction protocol in order to give rise to more trading pairs and ‘legos’. Soon, the venue will launch a payment token, giving early adopters of the platform 50% trading fee rebates and other rewards.

Read this next

Institutional FX

FX volume drops 13pct at CLS Group in April 2022

FX settlement specialist CLS Group today reported that the executed volumes of currency trading on its platforms were notably down in April.

Crypto Insider, Opinion

Regulation: The Gold-Standard for Crypto-Assets

When the US supervisory authority SEC allowed an investment product referencing Bitcoin futures to be traded for the first time last October, this was widely perceived as a signal that cryptocurrencies had finally become established as an asset class.

Executive Moves

Solid hires FX industry veteran Darren Barker for multi-bank ECN’s business development

His curriculum vitae includes former roles at Cantor Fitzgerald, Sucden Financial, R.J. O’Brien, Jefferies, Natixis, Unicredit, J.P. Morgan, Raiffeisen, RBS International, UBS, Deutsche Bank, and Citi. 

Inside View

Mihails Safro, xpate CEO: Tips sellers need to know to overcome compliance obstacles

The unprecedented growth of e-commerce changed shopping dramatically last year. Many sellers suddenly faced a rapidly growing number of customers who had to stay home during the lockdown. When some clients adopted Netflix and Spotify as part of a daily routine, others ventured into online business. Robinhood alone saw a whopping 6 million rise in user numbers in 2 months. 

Institutional FX

BMLL delivers Level 3 data to Kepler Cheuvreux for order book analytics and algo performance

The solution covers more than 6.5 years of harmonised historical data from 65 venues and combines it with easy to use APIs and analytics libraries in a secure cloud environment. 

Digital Assets

Crypto Is An Invaluable Tool In The Fight Against Financial Oppression  

Crypto has proven itself to be much more than just a hot investment. Indeed, some say it’s poised to play a critical role in the future of finance

Executive Moves

Parameta appoints Head of Benchmark and Indices with a focus on ESG and rates

The firm said building out its benchmarks & indices offering will now be a core priority, with a particular focus on the ESG and rates space.

Digital Assets

WunderTrading brings automated crypto trading to United States

“Among developed countries, Americans are the heaviest users of cryptocurrencies, with 13% having invested in cryptocurrencies over the past year.”

Retail FX

ACY Securities sponsors child safety and family welfare charity Barnardos Australia

Sponsoring Barnardos will give ACY Securities and its employees an opportunity to do volunteer work through different outreach programs.