Overstock.com Unit to Unveil Security Token Bourse

Overstock.com Unit to Unveil Security Token Bourse

A subsidiary of US online retailer Overstock.com announced its plan to introduce a regulated exchange for security tokens in the third quarter this year, its official said.

“I would like to see something trading in Q3,” Patrick Byrne, chief executive officer and founder of Overstock, told Reuters in a phone interview. 

Trading platform provider tZERO has partnered with Box Digital Markets LLC (BOX Digital) in a move to “launch [the] industry’s first security token exchange.” The new platform will “list and publicly trade security tokens for companies that issue, or convert existing stock to, security tokens.”

The two companies will equally own the new joint venture, with each having an equal representation on the board of directors. They shall have one mutually agreed upon independent director.

Under the partnership, tZERO will infuse cash and license its blockchain technology for operation of the security token market. On the other hand, BOX Digital will provide personnel and expertise for securing the necessary regulatory approval for running the security token market.

“Lisa Fall, who currently serves as CEO of BOX Digital and as president of BOX Options Exchange LLC, would be the CEO of the joint venture,” their joint announcement said.

The joint venture shall seek the approval of the US Securities and Exchange Commission (SEC) for the new bourse specifically catering to security tokens following the execution of definitive documentation.

The announcement comes after both firms entered into a letter of intent for the establishment of such an exchange.

“tZERO has proven to be a pioneer in the development and practical use of blockchain technologies for capital markets for a number of years,” Fall said, citing tZERO’s track record and accomplishments and BOX Digital’s expertise in operating equity options marketplace.

TZERO would continue to coordinate with the SEC for the development of the first-ever platform which will integrate blockchain capital markets into America’s National Market System, Tzero CEO Saum Noursalehi said, adding their “reputation and deep experience” would be a major asset in achieving their goal of forming the first SEC-regulated exchange for trading crypto securities.

Last month, Byrne told CNBC it is safer to raise money from security token offerings (STOs) than initial coin offerings (ICOs).

He said: “It’s the new term… The industry is distinguishing very clearly now between ICOs and STOs. 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.”

The SEC started its probe on the company’s own token sales in February which the latter launched last December.

“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,” Tzero explained.

BOX Digital is engaged in the business of creating and developing markets for trading digital assets in a regulated environment. It is a unit of BOX Holdings Group LLC that owns and runs Box Options Exchange, a duly registered national securities exchange.

tZERO is focusing on the development and commercialization of financial technology (FinTech) based on blockchain, which pertains to cryptographically-secured, decentralized ledgers. It is the first SEC-regulated crypto alternative trading system (ATS).

Listed on the Nasdaq Stock Market, Overstock.com is an online retailer based in Salt Lake City, Utah that sells a broad range of items at low prices, including furniture, jewelry, electronics, apparel, and home improvement. It also has a marketplace to provide customers access to hundreds of thousands of products from third-party sellers.

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