Overstock receives SEC approval to issue up to $500 million in securities via Bitcoin blockchain

On December 17, the U.S. Securities and Exchange Commission (SEC) approved the online retailer Overstock.com to issue the company's shares through the Bitcoin blockchain. According to the S-3 application submitted by Overstock to the Securities and Exchange Commission, the company hopes to issue up to $500 million in new securities through the blockchain, including common stock, preferred stock, depositary receipts, warrants, bonds, etc.

Over the past year, Overstock has developed a trading platform called TØ that is based on blockchain technology. Blockchain is basically a massive distributed database that spans the globe and is run and maintained by independent computers. With tokens like Bitcoin, this ledger can track transactions on the Bitcoin network, but it can also be used to track transactions of any other value, including stocks, bonds, and other financial securities. Previously, Overstock has used blockchain to issue private bonds, which does not require regulatory approval. Now, the SEC has told Overstock that it can do the same with publicly traded securities.

Such a trading system can eliminate unnecessary middlemen in the traditional trading market.

According to Overstock’s public filing, the SEC has approved an amended S-3 filing that will allow the company to issue publicly traded securities on a blockchain. Byrne plans to announce the news at a conference in San Diego. It is not clear when the company will choose to issue publicly traded securities on a blockchain.

"You could say this is a high priority for us in 2016," Overstock CEO Patrick Byrne told Wired magazine.

It is reported that Overstock will issue these publicly traded securities through its TØ blockchain platform, and it also plans to provide this "crypto-securities" service to other companies. It should be noted that companies that choose to issue company stocks through the TØ platform need to obtain separate approval from the U.S. Securities and Exchange Commission.

Byrne believes that blockchain technology is to capital markets what the Internet is to consumers, and its design provides a safe, transparent and reliable way to record who owns a specific security at any time. In Byrne's view, it can replace the old system operated by traditional stock exchanges.

Traditional exchange giant Nasdaq is also keeping a close eye on this technology. Its Linq project, which is still in the testing phase and is used in the private trading market, uses blockchain technology to manage stock transactions of private companies. Nasdaq has previously hinted that this technology may also be used in its public trading market.

Solving the naked short selling problem

As a disciple of Buffett, Byrne has a doctorate in philosophy. He focuses on economics and law and is also inclined to liberalism. For many years, he has wanted to reform Wall Street. In his view, Bitcoin is something that can realize his wishes. In early 2014, Overstock became the largest online retailer to accept Bitcoin at the time.

Today, Bitcoin accounts for only a small portion of Overstock's total sales, but Byrne believes the technology will grow and blockchain will have an equally huge impact on the stock market. A decade ago, Overstock fell victim to the dark art of Wall Street, known as naked short selling, and Byrne believes that digital ledgers can fill that gap and make naked short selling possible. Basically, naked short selling involves selling shares that don't exist.

It is reported that the TØ.com project is regulated by the U.S. Securities and Exchange Commission, and the project was registered with the U.S. government at the beginning of this year.

Targeting the $954 billion securities lending market

Currently, TØ plans to help other companies manage financial securities through blockchain, which is already happening. In addition to issuing private bonds, TØ also provides tools that allow companies to borrow and lend stocks through blockchain. This design targets the $954 billion US stock lending market, eliminating traditional middlemen and filling loopholes in stock settlement, allowing traders to conduct "naked short selling" transactions of shares.

According to Overstock and TØ, some hedge funds and other organizations have already tested such a system.

Original article: http://www.wired.com/2015/12/sec-approves-plan-to-issue-company-stock-via-the-bitcoin-blockchain/
Author: CADE METZ
Compiled by: Satuoxi
Source (translation): Babbitt Information (http://www.8btc.com/overstock-bitcoin-blockchain)