Overstock’s tZERO now live: What does it mean for cryptocurrency?
Predictions that 2019 will be the year of security tokens are well on track with the launch of tZERO.
Overstock's much-anticipated tZERO token platform officially commenced trading late last week, allowing users to trade the platform's tokens.
In the long run, tZERO aims to be a modular security tokens platform that will be the marketplace for Overstock's numerous "on the blockchain" series of investments, such as wine futures on the blockchain, land rights on the blockchain, voting on the blockchain, identity on the blockchain and so on.
And in the medium run, it aims to be one of the first appropriately regulated US-based security token platforms around. If all goes well, it might be a major hub for the next generation of non-utility security tokens. But in the short run, it's still moving incrementally and tZERO still closely resembles a traditional exchange in many ways.
Still, all signs seem to point towards security tokens being available to retail investors sometime in 2019.
"Our approach has been incremental: getting some benefits of blockchain but not going full-blown, and this is also something that made the regulators comfortable with letting us move forward," said tZero CEO Saum Noursalehi to CoinDesk.
Part of this means operating through a broker-dealer partner, in this case Dinosaur Financial Group, to facilitate trading and interface with customers. This comes with side effects like limited trading hours. In this case, tZERO will be trading from 9.30am to 4pm EST only.
"Initially we did it to kind of mimic the market, but Dino is our broker-dealer at this point and we wanted to make sure there is support available for investors during the broker's business hours," Noursalehi said.
The technology is there to enable 24/7 trading though, and tZERO aims to move in that direction as regulators become more comfortable with security tokens. It will also aim to become its own retail broker-dealer. It hopes that by August retail investors will be able to start trading at tZero. Currently, it's only open to accredited investors.
The slow roll-out and some teething issues such as slow deposits on launch haven't dulled industry appreciation for the steps tZERO is taking though.
"It's great to finally have a US based compliant exchange go live that can trade tokens besides utility tokens," said Tron Black from Ravencoin, a tokenisation-focused cryptocurrency that's received hefty funding from Overstock.com CEO Patrick Byrne.
Beyond being a platform, tZERO and Overstock.com have also joined the industry giants pushing towards unified security token standards. By the time tZERO plans to open up security tokens to retail investors, it also aims to have a lot more clarity around industry expectations for security token and platform requirements.
Disclosure: At the time of writing, the author holds ETH.