Overstock.com’s blockchain subsidiary tZero has teamed up with BOX Digital Markets LLC (BOX Digital) to launch a securities clearing and settlement platform based on the blockchain that lets companies raise capital with security tokens.
The joint venture, which will capitalize tZero’s regulatory approval to operate as an alternative trading system (ATS), aims to create a way for companies to tokenize equity and issue it on a blockchain without running afoul of regulatory obligations.
The move is being seen as a response to the US regulators’ approach which classifies certain digital tokens as securities, and therefore come under the SEC’s supervision. The Wall Street’s top watchdog made it clear that any entity wants to become an ATS needs to register with the SEC as a broker-dealer and become a member of a self-regulating organization, such as the FINRA.
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If successful, the proposed joint venture, which would be equally owned by tZERO and BOX Digital, will also provide a secondary market liquidity for ICO tokens that are offered and sold as securities. An alternative trading system is a trading venue that is not regulated as an exchange but operates for matching the buy and sell orders of its subscribers.
Lisa Fall, CEO of BOX Digital and president of BOX Options Exchange LLC, commented: “tZERO has proven to be a pioneer in the development and practical use of blockchain technologies for capital markets for a number of years. tZERO’s track record and accomplishments in this innovative area, coupled with BOX’s expertise in operating a highly efficient and transparent equity options marketplace, made partnering together an easy decision and we look forward to building a world-class platform for listing and trading security tokens.”
Saum Noursalehi, newly appointed CEO of tZERO, added: “Our partnership with BOX Digital Markets is a significant milestone that will create the first SEC-regulated exchange designed to efficiently trade crypto securities. Lisa Fall’s leadership, reputation and deep experience in the regulated securities exchange industry will be a major asset in achieving this objective. Together, 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.”