World’s First Regulated DeFi Firm Readies DEX Launch

Berlin-based project Swarm Markets has raised $15 million from 250 customers.

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Swarm Markets has obtained a license from German financial regulator BaFin. 

Swarm Markets Prepares to Launch

Swarm Markets, which claims to be the world’s first fully regulated DeFi protocol, has started onboarding capital to its launch liquidity program, the company announced Thursday. 

Swarm Markets provides the first fully-licensed DeFi protocol, consisting of an automated market maker (AMM) and decentralized exchange (DEX) on the Ethereum blockchain.

Swarm Markets has obtained several regulatory licenses to comply with German financial law. Most notably, the company holds a crypto custody license issued by the regulatory authority BaFin. Swarm Markets is not the first company to obtain such a license. Last week, Coinbase made headlines when it was approved by German regulators. 

The legal clarity on crypto assets is precisely why the company’s co-founders Philipp Pieper and Timo Lehes say they moved from the U.S to Germany. Commenting on the emergence of DeFi, Pieper said: 

“It became evident that DeFi was not just a gimmicky play for crypto insiders, and there was real novelty in shared liquidity and protocol-based lending. It gained more credibility with institutions by the month, and regulators also saw it as a winning proposition.”

All liquidity providers on Swarm Markets will need to meet know-your-customer (KYC) requirements to comply with the new regulation. 

Despite the regulatory go-ahead, the company is still cautious. At first, it will only offer pools for major tokens such as Bitcoin, Ethereum, and DAI. 

However, the company has a much grander vision for the future. The end goal for Swarm is to combine traditional financial assets with the power of DeFi applications. Doing so would allow for gold NFTs or gold/BTC trading pairs in a unified market structure. 

Disclosure: At the time of writing, the author of this feature owned BTC and ETH. 

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