The securities have not been and will not be registered under the U.S. Securities Act of 1933, as amended or with any other regulatory authority of any State or other jurisdiction of the United States or Canada and (i) may not be offered, sold or delivered within the United States or Canada, or to, or for the account or benefit of any U.S. Person or Canadian, and (ii) may be offered, sold or otherwise delivered at any time only to transferees that are Non-United States Persons and Non-Canadians.

September 19, 2023

The Merge; SEC and NFTs; Swarm trading data

Welcome to Swarm Markets’ media memo. This weekly update provides comments from Swarm Markets’ co-founders, Philipp Pieper and Timo Lehes, on key industry news that has caught our eye, plus our own developments.


Comments available on the following news items:

  • Ethereum: The Merge one year on
  • SEC comes after NTFs
  • Swarm users increase by 41%


The Merge one year on –  a work in progress


The Ethereum Merge is now one year old, and still a work in progress, as the failure to launch of the Holesky testnet would suggest. But crucially, it could be this next step that creates an adoption catalyst.


Among some of the biggest winners in the past year from the Merge has been liquid staking, which is having something of a renaissance thanks to the opening of token redemptions. This looked patently likely back in March when the Shanghai update came through and is now coming to fruition. 


Now, the Holesky testnet is coming online in order to prepare for the Dencun hard fork. Dencun is being rolled out in order to solve scalability issues on the Ethereum blockchain. It is this scalability that could unlock large-scale institutional adoption, and which has been missing from the Merge recipe until now. 


This is one of the absolutely key concerns from tradFi institutions around blockchain, a true layer one solution that allows meaningful volume to be put onto a network. Allowing for much larger trade flows is really critical to unlocking the market, especially when considering the sheer volume of TradFi transactions that take place. 


We’re in a different environment to that of September 2022 when the Merge launched. The promise of a much larger market facilitated by the Ethereum blockchain is still there but development is and was always going to be incremental. The good news is developers say the Holesky delay shouldn’t overly affect Dencun’s implementation, another step on the road to TradFi blockchain integration.


SEC now coming after NFTs


Not content with targeting platforms and withholding ETF approvals, the SEC has now set its sights on the NFT market. The US financial regulator has charged the creators of “Stoner Cats” with offering unregistered securities for sale. 


The project, which has the backing of Hollywood celebrities Mila Kunis and Ashton Kutcher, was set up to sell NFT tokens to fund an animated series. The playbook the SEC is deploying here is now fairly well trodden with the regulator accusing various firms and startups of offering unlicensed securities. But this isn’t the first NFT offering it has targeted, with Impact Theory charged in August. 


However, a court ruling at the beginning of September which declared bitcoin and ether were commodities rather than securities, in a win for Polygon, has cast some doubt over this strategy. Clearly the SEC would like for cryptoassets and tokens such as NFTs to be securities, because then they could regulate them. But we haven’t even proven that fact, and the courts so far don’t seem charitable to the idea. 


What is clear is that regulators are moving in and projects, entrepreneurs and builders need to be be cognisant of how digital assets may or may not be treated in different jurisdictions. A regulated liquidity solution to trade and invest in these assets is the safest option for investors. 


However, until we have definitive clarity – which in the US might literally mean a ruling in the Supreme Court – then the sector in the United States will continue to blow with the wind and suffer from uncertainty, waiting for the day the SEC comes after them. The US still lacks a framework for a regulated solution to trading digital assets that could be considered securities. This of course could be mitigated by serious and thoughtful legislation to create such a framework  but this so far seems lacking in any articulation from Congress.


In the meantime, regions such as the EU will continue to benefit from the onshoring of capital, innovators and businesses looking for a clear regulatory structure to work within. While the US is the largest economy in the world, it is starting to fall behind its peers thanks to a lack of direction on the future of crypto. 


Swarm’s user base grows 41%

Swarm has released six month trading activity data for its tokenized public stocks and bond ETFs, revealing retail investors’ favourite tokenized assets.


After six months of trading, Coinbase is the most popular asset among retail investors, followed by Tesla and Apple stocks (full table below). Swarm’s is the only liquidity venue where tokenized assets can be traded on a regulated and decentralized infrastructure. 

Swarm’s tokenized assets are prospectus-based and can be sold to both retail and institutional investors. 


Since launching tokenized stocks and bond ETFs on February 23, 2023, the platform has seen a 41% increase in the number of new users. The average age of users is 37 and top countries where they are coming from include UK, Germany, Indonesia, Turkey and Australia.


Rank by trading volume Asset Token tracker
1 Coinbase COIN
2 Tesla TSLA
3 Apple AAPL
4 iShares US treasury bond 1-3 year ETF TBONDS13
5 iShares US treasury bond 0-1 year ETF TBONDS01
6 Microstrategy MSTR
7 Blackrock BLK
8 Intel INTC
= 9 Coupang CPNG
= 9 Microsoft MSFT