Overstock announces first legal platform for token exchange trading

Overstock’s Medici just launched the world’s first ever Alternative Trading System.

Overstock's blockchain subsidiary, Medici, just announced today the launching of the world's first ever Alternative Trading System (ATS). This system will provide a marketplace enabling individuals to exchange cryptographic tokens which will be categorized as securities in the US. Overstock announced in June that they were looking towards utilizing the latest financial technology in order to develop a regulated blockchain stock market that is more suited to token trading than traditional markets.

The ATS began as a collaboration between RenGen, a firm specializing in financial technology, and Argon Group, an investment bank specializing in ICO capital raising. The ATS will be regulated by the SEC as well as the Financial Industry Regulatory Authority (FINRA).

When the SEC decided to categorize certain digital tokens as securities, Overstock’s Medici division found itself with a fully conceived product which was ready to capitalize on the globally growing market. Cryptocurrency markets have experienced an unprecedented boom in the last year. Cryptocurrency investments transcended the $2 billion mark in the last financial year.

Some financial experts seem to think that this is nothing compared to what lies ahead. According to Emma Channing, general counsel and interim CEO of Argon Group, the new ATS is likely to surpass the $2 billion mark in trading within the next 12 months. Argon predicts that the total ICO issuance volume will soon reach, and perhaps surpass $4 billion.

Essentially, the ATS will provide individuals with a legal, legitimate, and regulated platform where tokens can be comfortably exchanged. Additionally, individuals will have an alternative market which specializes in cryptocurrency, as opposed to the New York Stock Exchange or Nasdaq. This alternative platform has been described as a large step forward for digital currencies and tokens. Other than the ATS, there are no other ways for US investors to take part in regulated and secure token exchanges.

The CEO of Overstock.com, Patrick Byrne, described the launching of this new platform as a historic event. He explains that with the ATS, they are essentially opening up a new capital market. According to Byrne, the new ATS will be especially appealing to users as it will reduce transaction costs by up to 90%. These transaction costs are based on the current model used by traditional exchange markets. Another added benefit of ATS is that it will allow a user to clear trades at the time of execution. Currently, traders experience a three-day lag time when trading using traditional stock exchanges.

Byrne stated that the decreased costs and a quicker settlement time will contribute to a fairer market, one with greater liquidity as well as an efficient price discovery. However several developers and entrepreneurs who are currently launching token sale might be impacted negatively by the ATS.

Current ICO issuers are all faced with a dilemma. The ICO issuers must either try to develop a token that does not adhere to the SEC’s definition of security tokens. Alternatively, they can meet that definition and forfeit the liquidity that follows after being traded publicly.

Channing believes that the new ATS platform will even eliminate that choice. Channing stated that it is Argon’s position that the ATS platform will encourage ICO issuers to develop tokens as investment products. In turn, this will give ICO issuers more security and they can promise possible investors a return as well as portfolio tokens.