The latest and most exciting offering from Overstock.com is here, and it's not discount mattresses or costume jewelry. Improbably, the e-commerce giant is now the forerunner in crypto financial technology. They announced in a Sep. 27 press release that they have the first Initial Coin Offering (ICO) exchange to be in compliance with the U.S. Securities and Exchange Commission (SEC). RenGen LLC, the Argon Group and tZERO (aka t0.com, Inc.), a subsidiary of Overstock.com, Inc. (OSTK​) have announced a joint venture to launch an Alternative Trading System (ATS) that will facilitate the Initial Coin Offering tokens in sync with the guidelines of the SEC and FINRA.

ICOs are a buzz world right now for two reasons; 1) the huge sums of money of raised via ICOs (more than $2 billion), which has exceeded the venture-capital funding in 2017 so far; 2) controversy surrounding the regulatory stances of such entities as the Securities and Exchange Commission (SEC), Financial Conduct Authority (FCA) and the People’s Bank of China towards ICOs.

“The landmark Joint Venture aims to redefine the way the ICO market looks at security tokens, and enhance liquidity to accelerate market development. Lack of liquidity has been a significant impediment to security token market development,” said Overstock’s press release.

An ICO can be considered the crypto version of the IPO. Just as IPOs raise money through shares issued, an ICO is a mechanism through which tokens (or coins) are sold to raise funds for a project. However, instead of fiat currency, Bitcoin (BTC) or Ethereum (ETH) are used to buy these tokens on a blockchain platform. These virtual tokens are then listed on a virtual currency exchange where they can be bought or sold. 

“With ICO blockchain offerings surpassing traditional early stage VC funding and U.S. regulators seeking legitimate venues to support security token offerings, with this JV tZERO continues to maintain its leading edge in blockchain financial technology,” said Patrick M. Byrne, CEO of Overstock.

Back in December 2016, T10 announced the successful implementation and production level use of its distributed ledger technology-based platform in the issuance of a registered security. The shares, issued by Overstock.com were the first in history able to trade on an alternative trading system (ATS) utilizing distributed ledger technology. The trades executed through the t0 (t-zero) platform, settle on trade date, or T+0, instead of the usual three-day settlement period, T+3. (Related reading, see; Are There SEC Guidelines on ICOs?)

Patrick M. Byrne has proved that his enthusiasm for Bitcoin and its underlying technology wasn’t a fad. Back in 2014, when no major revenue generators were accepting bitcoin as payment, he decided that Overstock.com, with $1.4 billion in annual revenue at the time, would accept bitcoins as payment for merchandise. While some speculated that the move was merely a publicity stunt, Byrne's keynote address at the Bitcoin2014 conference in Amsterdam revealed that Bitcoin resonated deeply with his philosophical outlook. Subsequently, per Overstock's official site, “Byrne created Medici, a subsidiary within Overstock.com building blockchain-based financial technology solutions. In 2015, Byrne used Medici's t0.com securities trading platform to become the first person in history to purchase a digital bond entirely on the bitcoin blockchain.” 

The Argon Group is an investment bank with a focus on the emerging cryptocurrency and token-based capital markets. RenGen LLC is an investment, technology and financial services firm focusing on innovative blockchain technologies. Meanwhile, t0.com, Inc. (“tZERO”) is a majority-owned subsidiary of Overstock.com, focusing on the development and commercialization of financial technology (FinTech) based blockchain technologies. “Now, by combining our expertise with Argon's advisory services and RenGen's electronic trading, deep liquidity and market making capabilities, we are in a position to launch the only U.S. SEC compliant token trading venue,” concluded Dr. Byrne. 

The issuance of tokens as securities will add great certainty for investors as well as issuers while adding credibility to this medium (ICOs) of raising money while resolving issues such as liquidity, pricing, uniformity and legality.​​

 

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