The blockchain subsidiary of online retailer Overstock is teaming up with RenGen and Argon Group to launch an SEC-compliant Alternative Trading System (ATS) for trading digital coins issued in initial coin offerings (ICOs).
The ATS sees Overstock's tZero unit and its partners try to tap into the ICO craze, which has emerged as a popular way for firms to raise capital, bringing in more than $2 billion in the last two years.
However, regulatory concerns have seen many potential investors put off, affecting liquidity. In July, the SEC said that any digital token with an income stream is a security and that security tokens may only be traded on an ATS or national securities exchange.
Overstock acquired a license for an ATS when it bought Pro Securities back in 2015 and says that the new platform will be in compliance with SEC and Finra regulations.
The ATS will combine tZero’s blockchain-based trading platform with RenGen’s ability to provide liquidity, market making and algorithm technology, and the Argon Group’s ICO advisory experience and security token clients. SaftLaunch will provide AML and KYC capabilities.
Patrick Byrne, CEO, Overstock, says: "With ICO blockchain offerings surpassing traditional early stage VC funding and US regulators seeking legitimate venues to support security token offerings, with this JV tZero continues to maintain its leading edge in blockchain financial technology."
The plan sent shares in Overstock soaring, closing yesterday up 23.45%, or $5.50, at $28.95.