tZERO is a secondary market and blockchain ecosystem that focuses primarily on traditionally illiquid investments. These investments, such as private equity in large private firms or commercial real estate, provide investors with limited options for secondary liquidity.
Even when an investor finds a secondary trading platform, the process is notoriously slow and expensive. Additionally, this type of investment lacks transparency compared to traditional securities investments. These reasons have left investors with a lack of trust in the market. tZERO seeks to regain this trust via an open blockchain-based approach that puts investors’ needs first.
According to the firm’s founder and former CEO, Patrick Byrne, the goal of tZERO was to provide users with the ability to no longer rely on traditional institutional market structures. Rather, he envisioned a new type of trading platform based on cryptographically-secured, decentralized ledgers that provided enhanced market integrity.
Less Liquidity in the Market
Private liquidity is another market that tZERO has the potential to revolutionize. Today, there are half as many public companies as there were in 2000. Firms continue to remain private and focus on fundraising campaigns that are exclusive to accredited investors. Accredited investors are investors that have over $1 million in liquid assets. These events, known as private Series A funding rounds, are off-limits to most investors.
tZERO is an ideal addition to the industry because it provides the market with an easy way to tokenize and trade high-quality securities across a variety of industries.
. In this way, tZERO pioneered the effort to bring greater efficiency and transparency to capital markets through their next-generation trading platform.
How tZERO ATS Works
tZERO ATS is the premier alternative trading system for the issuance and trading of security tokens. tZERO ATS pioneered the first reported trade of a blockchain-based security in 2016. This platform was among the first to receive a nod of approval from the U.S. Securities and Exchange Commission (SEC) to operate. As such, tZERO ATS is the largest secondary trading platform for digital securities in the world.
tZERO ATS changes the game because it enables average investors, through its subscribers, to trade shares of private companies as easily. Specifically, customers of tZERO ATS subscribers trade conventional un-certificated securities. In the tZERO ATS ecosystem, the digital securities function as a means to provide more transparency to investors rather than an actual tokenized security. Consequently, all records are still maintained in the same manner as traditional securities.
In the tZERO ATS ecosystem, all buyers and sellers trade through a dark pool. This strategy allows tZERO ATS to act as a matchmaker in the transactions.
History of tZERO
tZERO ATS is a wholly-owned subsidiary of tZERO Group, Inc. (tZERO). tZERO’s journey to the top begins in 2014. It was at that time that the company’s CEO began working with Overstock’s Medici blockchain project. The goal of Medici was to allow Overstock to advance blockchain technology. tZERO is a subsidiary of Medici Ventures, the blockchain-focused, wholly-owned subsidiary of the publicly traded firm, Overstock.com Inc. (NASDAQ:OSTK). In 2016, tZERO acquired tZERO ATS.
In 2018, tZERO completed the issuance of its Preferred Equity Tokens, Series A (TZROP). TZROP was issued in a private placement to investors who had signed agreements for future equity prior to August 6, 2018, and fully funded through August 8, 2018, the close of the TZROP offering..
Joint Venture with BSTX
The joint venture between tZERO and BOX Digital announced in June 2018, the Boston Security Token Exchange LLC (BSTX), intends to operate a U.S. national securities exchange facility of BOX Exchange LLC and support trading in security tokens. tZERO is working to create the necessary technology and will manage the ongoing technology implementation, administration, maintenance, and support. BOX Digital is providing executive leadership and regulatory expertise. The commencement of operations of BSTX remains subject to approvals by the SEC regarding the proposed trading rules for BSTX and other matters related to its operation.
Effective January 1, 2019, tZERO acquired 100% of the equity interest in tZERO Crypto, Inc., formerly Bitsy, Inc. (tZERO Crypto), a startup founded to create a regulatorily compliant bridge between cryptocurrency and fiat currency for retail customers. tZERO Crypto began limited operations in 2018 and tZERO expanded the cryptocurrency wallet's capabilities throughout 2019. tZERO Crypto now provides non- custodial cryptocurrency wallet and exchange services allowing customers the ability to store, purchase, and sell certain cryptocurrencies through the tZERO Crypto mobile application.
In June 2020, tZERO recorded record growth on the platform. Today, tZERO ATS accounts for over 90% of all global security token trade volume. Additionally, the platform is responsible for over 80% of the total token dollar value of the sector. Notably, news of these milestones pushed Overstock’s shares are up 8%.
How to Trade on tZERO ATS
To trade on tZERO ATS you need to sign up for a brokerage account. This process requires you to complete a full registration including KYC/AML compliance. Critically, your broker must be a subscriber to tZERO ATS. Your other option is to start an account with a broker-dealer that possesses a settlement account with a subscriber to tZERO ATS.
TZROP is based on an ERC-20 standard and is a preferred equity security that trades exclusively on the tZERO ATS. tZERO token holders receive quarterly dividends equal to 10% of tZERO’s adjusted gross revenue. In this way, TZROP provides investors direct exposure to revenue growth.
How to Get TZROP
You will need a brokerage account at Dinosaur Financial, LLC to get your hands on some TZROP. Originally, this token was exclusively traded by accredited investors. However, tZERO announced that TZROP is now available to be resold to non-accredited investors under Rule 144 under the Securities Act of 1933.
tZERO ATS – A Market Leader
It only takes a quick glimpse at tZERO ATS’s market dominance to ascertain the vital role this platform plays in the market. tZERO ATS is a true pioneer in the security token sector. Consequently, this platform will remain the dominant trading venue in the secondary securities market for years to come.