Securities Token Exchanges Cranking Up in US: BOX +tZero

Lisa Fall, BOX Digital Exchange

Now that crypto cool kids are finally getting the memo: “These are Securities!” ,  the proposed first fully regulated Securities Token Exchange is coming to the US-via the Boston Options Exchange.

tZERO, the digital-themed broker-dealer created by Patrick Byrne and BOX Digital Markets LLC (BOX Digital)-a subsidiary of Boston Options Exchange, announced it has formed a joint venture to launch the industry’s first regulated security token exchange.

Lisa Fall, BOX Digital Exchange

Lisa Fall, Box Digital

On May 18, 2018, the two companies entered into a letter of intent to form an exchange to list and publicly trade security tokens for companies that issue, or convert existing stock to, security tokens. The proposed joint venture would be equally owned by tZERO and BOX Digital, with each having equal representation on the Board of Directors, together with one mutually agreed upon independent director. Lisa Fall, who currently serves as CEO of BOX Digital and as president of BOX Options Exchange LLC, would be the CEO of the joint venture.

“tZERO has proven to be a pioneer in the development and practical use of blockchain technologies for capital markets for a number of years,” said Ms. Fall. “tZERO’s track record and accomplishments in this innovative area, coupled with BOX’s expertise in operating a highly efficient and transparent equity options marketplace, made partnering together an easy decision and we look forward to building a world-class platform for listing and trading security tokens.”

tZERO plans to contribute cash and license tZERO’s blockchain technology for operation of the security token market. BOX Digital will contribute expertise and personnel toward obtaining regulatory approval and operation of the security token market. Approval of the U.S. Securities and Exchange Commission will be sought following execution of definitive documentation. Creation of the joint venture is subject to definitive documentation and customary conditions.

“Our partnership with BOX Digital Markets is a significant milestone that will create the first SEC-regulated exchange designed to efficiently trade crypto securities. Lisa Fall’s leadership, reputation and deep experience in the regulated securities exchange industry will be a major asset in achieving this objective,” said Saum Noursalehi, newly appointed CEO of tZERO. “Together, we will continue to work with the SEC as we develop a first-of-its-kind platform that will integrate blockchain capital markets into the current U.S. National Market System.”

According to electronic trading market veteran Jay Berkman, an Advisory Board member of fintech merchant bank SenaHill Partners and COO of investor documentation firm Prospectus.com LLC, “Now that pragmatic securities industry thought-leaders have figured out how to package crypto assets within the construct of a security so as to conform to the US regulatory regime, nobody can dispute the fact the genie is out of the bottle .  Added Berkman, “Securities Token Offerings (“STOs”) is a much more palatable approach, making way for a new mantra, “ICOs are dead, long live STOs”, until of course, another shoe drops.”

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Overstock.com’s Patrick Byrne To Launch Blockchain ATS for Stocks

blockchain-Byrne-brokerdealer-ats

(MarketsMuse) 09 Sept–“What’s Next? Well, for those familiar with Patrick Byrne, the controversial and innovative founder of Overstock.com, one of the first online retailers to embrace the use of bitcoins, it should not be a surprise that Overstock’s chief honcho would ‘get the joke’ and realize its all about the underlying technology that powers cryptocurrency applications, known as distributed ledger. While bitcoin currency continues to encounter challenges in terms of mass embracement, the real grease that makes the makes the wheels turn is under the hood. With that, Overstock subsidiary “T0” (T-zero) is taking a page from both the industry consortium formed by R3 and the Senahill-backed Symbiont –both of which target institutional capital markets usage–and aiming it’s own sights on retail investors by setting to launch an equities-centric Alternative Trading System aka ATS powered by their own blockchain formula.

A distributed ledger is a consensus of replicated, shared, and synchronized digital data geographically spread across multiple sites, countries, and/or institutions.
A blockchain is a type of distributed ledger, comprised of unchangable, digitally recorded data in packages called blocks.
Rob Daly of MarketsMedia (not related to MarketsMuse) provides the scoop..

Online retailer Overstock.com expects trading to begin on its blockchain-based alternative trading system before the end of the year, according to company officials.

The ATS will be operated by Overstock.com subsidiary TO as part of the company’s Medici Project, and it will only handle trades in the company stock, at least at first. So while it’s not an immediate competitive threat to the existing field of 13 U.S. stock exchanges plus several dozen ATSs, the initiative will be closely watched as a gauge of the potential of distributed-ledger technology in capital markets.

The ATS will write completed trades to its blockchain instead of routing them to the National Securities Clearing Corp., a subsidiary of Depository Trust & Clearing Corp., for clearing.

Overstock.com plans to prime the liquidity on the ATS through a new issue of corporate shares to existing shareholders the day before trading commences on the new trading venue.

 

T0 officials plan to formally announce its partnership with a broker-dealer on Sept. 12. “For those who want to trade on the ATS, they will have to create an account with the broker-dealer,” said Overstock’s man-in-charge Judd Bagley, who declined to name the brokerage firm.

BrokerDealer.com database of Global Broker-Dealers includes thousands of BDs in 30+ countries.

I WANT TO ACCESS BROKERDEALER.COM GLOBAL DATABASE

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Frmr Top BrokerDealer Babe Meets Bitcoin

blythe masters

(MarketsMuse.com)–Blythe Masters, once considered the “Babe of BrokerDealers” in view of her long tenure at investment bank JPMorgan—which included her being credited for helping to create credit default swaps (CDS), has since aspired to be known as the Blockchain Batgirl through her new role as CEO of the bitcoin-buttressed startup Digital Asset Holdings.

Despite the fact Ms. Masters is undeniably a bona fide member of any Masters of the Universe Club (sic Tom Wolfe/Bonfire of the Vanities)—and however much “blockchain technology” has inspired a cadre of banks and broker-dealers to get on board a train that could evolutionize the financial industry at large, and despite a potential death-knell magazine cover story in October of this year courtesy of Bloomberg Magazine, Masters’ foray into the world of fintech startup funding is proving to be bumpy at best, as the blue ocean this blue-eyed blonde s is swimming in is already populated with migrant banker’s bodies floating ashore and otherwise left beside the yellow-brick road to billion dollar Unicorn valuations.

Notes NY Times business news journalist Nathaniel Popper—one of the 4th estate’s leading bitcoin industry experts, Digital Asset Holdings is running into the types of startup funding challenges that mostly all mortals encounter when pitching ideas scrapped from a whiteboard: questionable valuation, untested technology value proposition, a highly-fragmented and often dysfunctional target audience, and last but not least, an investment structure that is being increasingly challenged for giving preferential ownership treatment to a select group of early investors. In this case, Digital Asset Holdings is providing a very sweet deal and a very exclusive suite of follow-on round financing options to its anchor investor, which happens to be her former employer, JPMorgan.

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The First Crypto Corporate Bond Offering..aka Bitcoin Bond from Overstock

overstock crypto bond offering

BrokerDealer.com profiles retailer Overstock.com’s plan to issue the first crypto corporate bond deal using the technology that underlies cryptocurrencies such as bitcoin.

Below extract is courtesy of Finextra.com. BrokerDealer.com provides the world’s database of broker-dealers registered in the US as well as a comprehensive directory of non-US brokerdealers based in 30+ countries throughout the globe.

Last Autumn, the firm acquired a 25% stake in alternative trading system (ATS) PRO Securities as part of a long-term ambition to use the core blockchain technology to create a cryptosecurity trading system, in which computer algorithms are used to trade virtual stocks issued by public companies.The company is now scouting institutional investor interest in its first digital bond issues, which is powered by Overstock.com’s TØ.com technology – a name that refers to the fact that trades on the system securely settle the same day, as opposed to the T+3 convention on Wall Street.”The cryptorevolution has arrived on Wall Street,” says Overstock.com CEO Patrick Byrne. “We’re making it official by offering the world’s first cryptosecurity.”According to Byrne, issuing the TIGRcub bonds on the TØ.com platform proves that cryptotechnology can facilitate transparent and secure access to capital by emerging companies. He says that a circular informing investors of the cryptobond offering was distributed on 1 June, 2015.

Overstock.com Gets Into Bitcoin-BrokerDealer Biz with Stake in ATS

Patrick Byrne,

BrokerDealer.com blog update profiles the latest chapter in CEO Patrick Byrne’s playbook to become a blockchain billionaire and scheme to open a bitcoin exchange via his acquisition of a  25% stake in PRO Securities, an SEC-registered alternative trading system. Whether Byrne is a Blockhead or will prove to be the first Blockchain billionaire remains to be seen, but he is one determined guy.

Online retailer Overstock has stepped up its plans to issue “digital securities” through the acquisition of a 25% stake in alternative trading system (ATS) PRO Securities, according to Wired.

Last year Overstock CEO Patrick Byrne hired developers and lawyers in an effort to create a platform – dubbed ‘Medici’ – that could use the core blockchain technology to create a cryptosecurity trading system, in which computer algorithms are used to trade virtual stocks issued by public companies.

Then, in a recent prospectus filed with the SEC related to the sale of securities, the company revealed: “We may decide to offer any of the securities described in this prospectus as digital securities, meaning the securities will be uncertificated securities, the ownership and transfer of which are recorded on a cryptographically-secured distributed ledger system using technology similar to (or the same as) the distributed ledger technology used for trading digital currencies.”

Details of how this would be achieved have now emerged, with Wired reporting that last autumn a stake was acquired in SEC-regulated PRO Securities, which has now amended its charter to say that it may handle trades in digital securities via blockchain-related technology.

Bryne has told Wired that his firm has already built the blockchain-related tech on top of PRO Securities platform and is now ready to show it to regulators.