Though Bitcoin and cryptocurrency market is on a bearish trend these days, it is true that the interest on virtual currencies is far from over. In fact, there are some companies that are engaging in blockchain technology in order to raise funds and ultimately to revitalize the company.
And this is exactly the case with Overstock’s shares after announcing its cryptocurrency venture. Hong Kong-based GSR capital opted to invest $160 million in tZero which is Overstock’s venture in the crypto market. More than 60% of the total sum has been funded at this point. And also, around 1,000 people took part in the token sale. GSR Capital decided to purchase the security token at $10 per token. Also, the Security Token Offering (STO) of tZERO is expected to last until August 2018. The maximum amount of tokens that are going to be issued is at $250 million. With tZERO exchange, Overstock is planning to bring “efficiency and transparency” to the table.
Security Token Exchange
TZERO is a security token exchange. The tokens are ERC-20 tokens that are running on the Ethereum blockchain. And with this, it gives GSR capital no voting right. This move, however,r will entitle the investors of the company dividends. The deal will enable 10% of the tZERO adjusted gross revenue to be distributed among the token holders quarterly. And the dividends will go through the regulated trading platform of tZERO.
According to Overstock CEO and tZERON executive Chairman Patrick Byrne, “Years ago, we saw the world-shaking potential of blockchain, and since then we have been methodical in building tZERO into a company that will bring efficiency and transparency to capital markets domestically and abroad”.
He also added that “I truly believe what we are doing is historic and, while there is still much to be done, our success in this STO (security token offering) has given us the resources we need to see it through”
And because of the announcement of Overstock to explore the cryptocurrency market, OSTK stock rose by more than 12.5% on Friday.
Backed by Real Assets?
The Securiy tokens are backed by real assets such as commodities. The prototype of the tZERO security token trading platform was first introduced in April this year. tZERO’s goal is to produce a means of trading that is easy to understand for its users. It also has different features such as order management system, a risk management software and even a matching engine.
ICOs and SEC
There is an increased scrutiny when it comes to ICOs and tZERO’s initial coin offering wasn’t exempted. Recently, the US SEC announced that ICOs are considered securities while Bitcoin and Ethereum were considered as commodities.
The US Securities and Exchange Commission took a closer look at tZERO’s ICO in March. In fact, it even caused the shares of Overstock to drop at this point. What Overstock.com did is file for its ICO that is not going to be classified under traditional securities but under the Regulations D and S. What this means is that those who invested in the ICO should be a US citizen and should not be involved in offshore transactions.