Medici, the blockchain unit of Overstock.com, announced news on Tuesday (Dec. 19) of the launch of tZero, an alternative trading system that is creating a platform to exchange cryptocurrency tokens in the U.S.
According to a report in CoinDesk, the first-of-its-kind alternative trading system (ATS) will be regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). Overstock’s Medici is teaming up with RenGen, a FinTech that will act as the market maker, and Argon Group, an investment bank focused on ICOs, to offer the ATS.
Rather than relying on broker-dealers to buy and sell securities, tZero hooks up buyers and sellers in a so-called dark pool. The idea is to develop an alternative to the NASDAQ using blockchain technology that is open and transparent.
The premier of tZero will mark the first regulator-approved way for U.S. investors to trade cryptocurrency. “I think it’s a historic event. We’re opening a new type of capital market,” Patrick Byrne, chief executive of Overstock.com said.
The CEO the ATS will create liquidity for tokens and will also lower transaction costs by 80 percent to 90 percent over the current model used by traditional securities exchanges. Because tZero uses blockchain technology, trades will clear as soon as they are executed, instead of through the average three-day wait time.
Bryne noted that fewer costs and faster settlement times will result in a market that is more fair. The executive plans to launch a $250 million initial coin offering (ICO) token sale with the tokens being used to buy and sell on the platform; the pre-sale is already oversubscribed.
Overstock’s CEO is so confident in this new platform and blockchain technology that he is gearing up to sell the retail arm of Overstock to focus on tZero and DeSoto, another Overstock partnership focused on blockchain.