Online retail giant Overstock has announced plans for a regulated exchange for token sales, via its blockchain subsidiary tZero (t0). Announced in partnership with Box Digital Markets, t0 is now pursuing approval from the U.S. Securities and Exchange Commission, in what would become one of the first platforms of its kind to act as an exchange for securities tokens.
The platform will allow companies to sell securities as tokens, either at origins or by converting existing stock into securities tokens. The tokens will be publicly traded on the exchange, similar to any other stock exchange, and could crucially provide an avenue for companies looking to deploy an ICO-type model without running afoul of regulators.
According to Overstock CEO Patrick Byrne, the exchange could be trading as early as the third quarter of 2018, assuming it is granted the necessary regulatory approval to go ahead.
tZero CEO SAum Noursalehi expects to work closely with regulators to develop the model, saying, “Together [with Box Digital], we will continue to work with the SEC as we develop a first-of-its-kind platform that will integrate blockchain capital markets into the current U.S. National Market System.”
The new venture will be owned in equal parts between t0 and Box Digital Markets, which already operates Box Options Exchange. The Box Digital CEO will become the CEO of the new securities token exchange, providing crucial experience of the securities sector to help deliver the model.
The move is in line with previous statements from Byrne around ICOs, and why so-called STOs, or Security Token Offerings, would present a better approach for both companies and investors.
“The ICO craze of last year created a toxic waste dump of financial assets. To me, that world of ICOs is a Superfund site…What we’re developing is a mechanism so that there will be a legal way to go forward and not create any new toxic waste,” Byrne told CNBC in April.
Since launching their own token in December, the company announced in February that the sale was being investigated by the SEC. However, the company was quick to point out there was currently no suggestion of any breach.
“While the SEC is trying to determine whether there have been any violations of the federal securities laws, the investigation does not mean that the SEC has concluded that anyone has violated the law,” according to tZero.