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tZERO: Successful migration from an ICO to STO

 

tZERO was launched by Overstock.com through an Initial Coin Offering-ICO, with the aim of raising funds for developing an alternate decentralized trading platform. The long-awaited tZERO security token trading platform will go live by the end of this week according to CEO Patrick Byrne. Overstock’s ATS (Alternative Trading System) a precursor to tZERO has been operational for two years but with limited volumes.

 

According to reports from coindesk, “tZERO will be led by Steven Hopkins, who was up until recently the chief operating officer and general counsel at Medici. Hopkins will serve as tZERO’s president, and now is looking to fill two other executive positions: head of issuance and head of an in-house broker-dealer that will serve tZERO’s clients.”

 

Migration from an ICO to a STO

 

Initially tZERO deployed the token contract and created the tokens which the holders could not access until January 10, 2019 —  essential compliance with securities regulations that they remain in a custodial wallet for 90 days post-issuance.

 

The three-month lockup period for the tokens is over and investors can opt for either a brokerage account with broker-dealer and tZERO partner Dinosaur Financial Group or put the tokens in their personal wallets. Non-accredited investors are expected to join the party by August 6, 2019, through an approved platform. tZERO also plans to allow secondary trading on international exchanges by registering its securities.

 

Surge in ICO numbers in 2018 despite SEC regulations

 

The number of ICOs worldwide skyrocketed in 2018. According to InWara data 2135 ICOs were conducted around the globe. For comparison in 2017 only 946 ICOs were conducted.

ICO numbers surge in 2018 despite SEC regulations
Source: InWara’s ICO+STO database

 

Despite this trend, many US citizens were prohibited from taking part in these token sales, this was because these tokens were not compliant with SEC regulations.

 

Key Global partners and funds raised

 

tZERO’s parent company Overstock.com has always been crypto friendly and interestingly was one of the first companies to accept payment in Bitcoins. Overstock.com is a US-based e-commerce giant, founded by Patrick M Byrne, is the acting CEO till date.

 

Chinese private equity firm, GSR capital is leading an ambitious investment round in tZERO and it’s parent company overstock.com. GSR has planned to invest $270 million in tZERO along with buying $30 million worth of tokens, despite investing heavily in tZERO, GSR capital also plans on investing $100 million in Overstock.com.

 

Earlier last month, tZERO subsidiary was reported to be hired by GSR Capital to develop a token for trading cobalt. The objective was tokenization of up to $200 million worth of cobalt, a key component of electric vehicle batteries.

tZERO CEO Saum Noursalehi said in a statement:


“This funding will allow us to globally scale our blockchain capital market platform on a rapid timeline, ushering in an era of trust through technology for the global economy.”

tZERO was able to raise $134 million through the sale of it’s 19.25 million TZRO tokens. Interestingly tZERO had an unusually lengthy ICO sale time that started in December 2017 and lasted several months. The offering started out as a more typical pre-sale ICO towards the end of last year but this became the second stage STO in March, after a comprehensive review by the Securities and Exchange Commission (SEC).

 

Competition on the horizon 

 

Templum trading aims, to build a platform that provides the stability of regulated markets and delivers it to the digital assets market. The company has raised $2.7 million in funding from a diverse group of investment firms such as Raptor group and Blockchain capital, to develop its alternate trading platform.

 

Why STOs are picking up pace in USA?

 

As ICOs are largely unregulated and lack viable legal framework, they are not compliant with SEC norms. Rampant clamp down by SEC on ICOs this year could possibly be a reason for the surge in the number of STOs, especially in USA.

Number of STOs by country
Source: Inwara’s ICO+STO database

 

Amongst the 91 STOs in the USA, Financial services were leading will allied sectors such as Trading and Investments also in the significant top. Real estate STOs did not surprisingly come second.

 

STOs according to industry worldwide

 

STOs according to industry worldwide
Source: InWara’s ICO+STO database

 

Investments and trading emerge as the market leader in STOs conducted so far, closely followed by Technology. Interestingly Financial services is the market leader in ICOs but get placed third in STOs.

 

 

 

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