25 June 2024 – Real-world assets platform Swarm Markets has today launched fully asset-backed digital gold with NFTs representing ownership, which are fully tradable and can be offered peer-to-peer.
The news comes as many asset-reference tokens, including gold-based, as defined by MiCAR, will face regulatory hurdles in Europe after the directive’s implementation on July 01 2024. MiCAR does not apply to crypto-assets that are unique and not fungible with other crypto-assets.
Swarm’s technical approach to tokenizing gold gives investors unprecedented transparency over the collateral they own both on and off chain. The gold ownership is represented in on-chain NFTs that each have unique identifiers. The gold bars will be custodied with Swarm’s key partner Brink’s, initially in its vaults in London.
The tokens will be fully redeemable for the underlying collateral, which will be delivered to token holders who successfully onboard, passing KYC and AML checks. In future token holders will choose which jurisdiction the underlying gold is stored.
Philipp Pieper, co-founder of Swarm Markets, comments: “Gold is the oldest investment in the world, and the market is thriving today as much as it ever has. Gold is the ultimate safe haven asset because it is one of the few rare assets that you can hold in your hand. Swarm’s technical approach to bringing gold on chain offers unrivalled transparency and flexibility to any other gold product on-chain today.
“We’re creating the amazon web services of gold on chain. Not only will investors have unique identifiers for their NFT, linking them to a specific gold bar or ounce, but they can own and custody their gold holdings digitally via blockchain, redeem it for the physical underlying collateral and choose where to store their physical gold. We’ve also ensured the product is compliant with MiCAR asset-reference token rules to give investors maximum confidence.”
The gold transactions are compliant with AML and CFT rules. By holding their assets on chain, investors will benefit from complete transparency and security in ownership of their tokens with each token verifiable on chain.
Tokenization provides additional benefits to holders with more efficient accounting, no requirement to handle the physical asset (unless they so wish) and a completely borderless market.
Timo Lehes, co-founder of Swarm Markets, comments: “DeFi has created enormous opportunities to change the way that the global financial infrastructure works. But until now, it has contented itself with crypto tokens that are highly correlated and have values predicated on notional opportunities and, in many cases, sheer momentum. Instead Swarm is committed to changing the economics of DeFi by making RWAs the core proposition of the market.
“We have already introduced on-chain stocks and treasury bond ETFs to investors and now we want to expand the asset universe to include the most physical asset in the world – gold. Gold is the ultimate safe haven asset, as it has been for millenia. But it is no less relevant today and can provide a good exit strategy for investors when crypto markets decline.
“The benefit of a token in the precious metal domain, which represents direct individual ownership, is that investors needn’t move off chain as a result. It underlines our commitment to bringing RWAs on chain and focusing cutting edge financial technologies on timeless assets and markets.”
Swarm is also the first organization in the world to offer tokenized US Treasury bills, and public stocks such as Nvidia and Microsoft, tradeable on a compliant, decentralized platform and held with institutional custodians.
By bringing RWAs on chain, Swarm is working to change the economics of DeFi – moving the sector from a market based on notional crypto value to one couched in real tangible assets that major global markets verify and value.
ENDS
