The US Securities and Exchange Commission (SEC) has reportedly approved Overstock.com’s bid to issue company stock over Bitcoin’s blockchain, marking a major milestone for the nascent discipline.
Overstock, the largest company to accept bitcoin for payment when it did so in early 2014, has been increasingly focusing on its blockchain ambitions. Late last year, the company unveiled Medici, its venture that would create an infrastructure for “cryptosecurities”, and its blockchain-powered tØ platform.
Wired reported the latest breakthrough, which will also be discussed by Overstock CEO Patrick Byrne during a keynote address today at the Bitcoin conference in San Diego, named Blockchain Agenda.
Byrne has taken issue with Wall Street practices like naked short selling, which allows traders to sell short securities without borrowing them first. He aims to address this and similar loopholes that exploit the fungibility of today’s securities, which according to Byrne, allows Wall Street players to make unfair gains.
Liquidity Constraints in 2021 – What is the Best Path Forward?Go to article >>
The advent of a security labelled and tracked over the blockchain can potentially transform the playing field in the long term.
Overstock applied to have up to $500 million worth of securities issued through its blockchain-based platform in an SEC filing earlier this year. It also bought a 25% stake in an alternative trading system (ATS), and later acquired SpeedRoute, a Wall Street trade routing technology firm.
One of the earlier demonstrations of its platform was the private sale of a $5 million ‘cryptobond’ to the affiliate of a New York-based trading firm. This sale apparently did not require SEC approval, but its grander plans do.
SEC’s nod will allow Overstock to issue securities both in its own shares as well as those of other companies. Other companies wishing to use Overstock’s blockchain platform, however, would require separate SEC approval. In order to promote adoption, Overstock wants to offer its infrastructure to other businesses.
While many banks are developing custom blockchains- either on their own or in consortiums- several notable players are going with that of Bitcoin, including Nasdaq.