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The new exchange is promised to drive the growth of security token market by changing the trade of virtual tokens issued via Initial Coin Offerings.
tZero, a subsidiary of e-commerce giant Overstock.com, has announced a joint venture together with RenGen and Argon Group to launch an Automated Trading System (ATS) for trading tokens issued via ICOs. According to Overstock CEO, Patrick Byrne, the platform will be the first to meet regulations of both US Securities Exchange Commission and Financial Industry Regulatory Authority.
This year alone, more than $2 billion has been raised in token sales, while the market cap of all blockchain-based digital currencies now amounts to over $143 billion. In the first half of 2017, the fintech investment in cryptocurrencies exceeded funding via venture capital, what demonstrates the industry’s huge growth potential.
“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,” Byrne said.
“tZERO has been at the forefront of the blockchain revolution for years, working closely with regulators since 2015 – launching the world’s first SEC compliant ATS for blockchain assets, the first private blockchain bond offering, and the first ever public issuance of a blockchain security.”
The JV is expected to improve liquidity, which has been a major hurdle to further development of the security token market. In July, the SEC claimed that any digital token is a new type of security and thus must comply with securities regulation. After the SEC report, Byrne noted, more startups will prefer to launch securities tokens instead of tokens that can only be used inside an app.
“We have long been advocating that issuing digital tokens as securities gives issuers and purchasers the greatest certainty about the legal regime that applies to the sale and the widest range of options to provide an attractive return for investors,” said Emma Channing, CEO and General Counsel of the Argon Group.
“The key issue to date has been the need for an appropriate marketplace to provide liquidity. This joint venture between tZERO, RenGen and Argon has the potential to completely change the face of ICOs.”
The new JV will leverage strengths of each company, combining tZERO’s groundbreaking trading system, Argon Group’s ICO advisory capabilities and RenGen’s expertise in providing liquidity, market making and algorithm technology.
“I have long believed that securitization is one of the best use cases for blockchain technology – and the transformative ICO market has proven so,” said Suleyman Duyar, Managing Partner, RenGen. “Patrick Byrne and tZERO had great foresight in developing and registering the first digital ATS, and now, in partnership with Argon, an industry-leading ICO consultancy, we are excited to bring our high-volume participation in cryptocurrencies, technology and trading expertise to this promising venture. It is a very exciting time to be an investor in ICOs.”
Overstock is one of the most active supporters of financial technologies among US-based businesses. In addition to being the first online retailer to accept bitcoin payments, its platform tZero became the first trading platform to issue public securities on the blockchain last year.