This week, Overstock.com announced revisions to its Series A-1 Preferred Stock (OSTKO). The firm wants to drop trading restrictions and allow investors to trade OSTKO shares immediately. This pioneering strategy provides liquidity to investors in a manner that wasn’t possible before the advent of blockchain tech.
Eliminate Rule 144 – OSTKO
All traditional shares require a six-month lockup period to be compliant with SEC Rule 144. During this period a series of processes occur to finalize the purchase. Overstock automated these procedures via smart contracts. Now the company seeks SEC approval to eliminate the need to adhere to Rule 144 in this instance.
The Original OSTKO Launch Date
The original record date for the OSTKO launch was September 23, but company executives postponed the date to push their new strategy. Now, Overstock plans to announce the new record date sometime in the next two months.
The new tokenized shares will be slightly different than their traditional counterparts. For example, Overstock’s board approved a conversion rate of one digital series A-1 preferred stock to ten shares in common stocks. Interestingly, the company chose to make the new stock only available via the Dinosaur Financial Group brokerage platform.
The Dinosaur Financial Group is also a partner with tZERO, Overstock’s blockchain subsidiary. In both instances, the Dinosaur Financial Group functions as the broker-dealer. Basically, the firm provides brokerage accounts for investors seeking to trade these digital assets.
Discussing the partnership at that time, Dinosaur’s Managing Director of Equity, Elliot Grossman described his company’s pride in being a pioneer in the industry. He said that the technology has the potential to create “disruptive changes for issuance, trading, and settlement in capital markets.” Today, Grossman is the CEO of tZERO.
Speaking on the OSTKO shares, Overstock’s Interim CEO, Jonathon Johnson discussed the interest seen from broker-dealers, regulators, and shareholders. He called the technology groundbreaking before touting integrated compliance and investor protections.
Most importantly, Johnson explained that blockchain technology improves the overall investor experience. He also described the tech as having an “enormous potential to transform society for the better.”
Slow Short Selling
It was Overstock’s ex-CEO, Patrick Byrne who first thought up the idea of tokenizing shares. Ironically, the strategy originated as a way to stop ramped short selling of their stock. Byrne claims a well-organized group of fraudsters targeted Overstock for the last year via these short sales attacks.
The short sellers seemed to only work with dollars so the plan to tokenize worked great. That was until early this week when Morgan Stanly and JPMorgan started accepting fiat payments for the tokenized stock. The news caused an investor frenzy that sent Overstock shares down 40% from a recent 52-week high.
Overstock is Full Blockchain
It’s interesting to see how Overstock uses its blockchain know-how to navigate the market-scape. In this case, the use of blockchain to stop short sales attacks resulted in the development of a better investor experience. You can expect to see more from these innovative developers in the coming weeks as OSTKO goes live.
Blockstation and Jamaica Stock Exchange Go Live with DSO Integration
Ready, Set, Go!
In a pilot program that dates back to 2018, the Jamaica Stock Exchange and Blockstation were able to demonstrate the future potential of digital securities.
Fast forward to 2020, and this relationship has paid dividends, as the pair has just announced the official launch of their new platform.
Through a series of services, Blockstation can host digital securities offerings (DSOs) for companies in search of capital through the Jamaica Stock Exchange. As a result, this capability brings Blockstation into rarified air, as they become one of very few tokenization platforms working so intimately with a traditional, regulated exchange.
While the new platform is being touted as a comprehensive ‘end-to-end’ solution, Blockstation decided to focus on a few key features/benefits on offer. The following points are drawn directly from their announcement.
- Built-in Know-Your-Client (KYC) and Anti-Money Laundering (AML) functionality to satisfy regulatory obligations
- Prospectus+ Smart Listing Accelerator Portal streamlines the creation of complete and compliant disclosure documentation
- Centralized digital filing and communication between all stakeholders to complete the IPO
- Real-time reporting and trade monitoring to mitigate abusive market tactics
- Dramatically reduced costs and timelines to conduct an IPO
Champing at the Bit
Building on the positivity surrounding the integration of Blockstation and the JSE, is the fact that various companies are already getting their ducks in a row to take advantage.
Despite just going live, there are already 5 companies being assessed for a potential DSO hosted by the JSE.
Perhaps because of their successful relationship with the JSE, Blockstation also finds themselves making inroads into another Caribbean nation – Barbados.
We previously reported on an MOU between the pair at roughly the same time as the pilot with the JSE. With the announcement of a finalized integration between Blockstation and JSE just occurring, will we soon see a similar announcement involving the Barbados Stock Exchange?
Marko Hafez, CEO of Blockstation, states,
“We are excited to officially launch the Prospectus+ Smart Listing Accelerator Portal for issuers to tokenize their equity and list on a regulated stock exchange…The portal features low costs, short timelines and international reach, making Tokenized IPOs suitable for companies of all sizes and an attractive proposition for issuers who never would have considered going public in the past.”
Marlene Street Forrest, Managing Director of JSE, states,
“Blockstation’s platform incorporates familiar compliance rules to ensure a fair marketplace. We have spent considerable time and effort in our quest to move forward with Blockstation and to date, the training and support they have provided have been excellent.”
Founded in 2015, Blockstation maintains headquarters in Toronto. The team behind Blockstation work to develop solutions meant to integrate traditional exchanges with blockchain based technologies.
CEO, Marko Hafez, currently oversees company operations.
Jamaica Stock Exchange
Founded in 1969, the Jamaica Stock Exchange maintains headquarters in Kingston. This regulated exchange has become the nation’s de facto trading platform since being launched roughly 50 years ago.
Managing Director, Marlene Street Forrest, currently oversees company operations.
In Other News
Over the past year, we have reported on various developments surrounding Blockstation. Whether establishing partnerships with exchanges, establishing industry framework, or attempting to lure athletes to the great white north, the company has remained busy.
MERJ and OpenFinance Expand on Asset Listings
Liquidity for All
The promise of digital securities becoming liquid assets is a wonderful thing. There is a major issue plaguing the sector to date, though – a lack of listings on secondary markets providing a home for these tokens.
While progress may seem slow to some, this is changing. This past week has brought multiple examples of this, as two digital asset exchanges have each announced the addition of new, differently structured, listings to their platforms.
Expansion of Listings
With a specialty in facilitating both loans, and crypto based remittance, IEC saw MERJ as an ideal home for listing. With the exchange already supporting various digital securities, the addition of IEC’s 106million common shares provides even more diversity among their offerings.
While this particular listing is not a security token, the company deals specifically with crypto and blockchain based endeavours. Furthermore, it builds on the expansion of offerings seen through MERJ – an expansion which directly benefits the security tokens that ARE listed on the exchange.
Paul Mathieson, Founder of IEC, states,
“After extensive global jurisdictional research, we are very excited to have listed our company on MERJ, the world’s leading regulated, blockchain-friendly stock exchange located in the middle of many future high growth areas. We view this listing as a great opportunity for institutional investors seeking exposure to the fintech, blockchain and cryptocurrency sectors by providing the ability to invest in the company equity of a licensed business on a regulated traditional stock exchange.”
Gamifying charity through blockchain – this is what Lottery.com is all about. After hosting a successful STO with the help of partners like Securitize, Lottery.com is able to leverage their LDCC tokens as a means for achieving ‘humanitarian needs’.
Unlike the above asset listed on MERJ, LDCC is a full-on security token. By attaining this listing, LDCC now becomes accessible to, not only accredited investors based in the U.S., but non-accredited investors, as well.
Tony DiMatteo, CEO of Lottery.com, states,
“We believe that digital security offerings are the future of fundraising. The transparency inherent in this type of offering aligns with our overall mission…By listing on the Openfinance global platform, we’re not only able to offer this unique type of asset to our current investors, but now we’re able to reach a broader set of investors. However, investors aren’t the only beneficiaries.”
In the past, we have been fortunate to have interviewed the CEOs of each, OpenFinance and MERJ. While these discussions date back to 2019, they are as relevant today as they were then.
Founded in 2017, OpenFinance maintains operations within the United States. Above all, the company works to provide services tailored towards the digital securities sector; Primarily as a secondary market / digital asset exchange.
CEO, Juan Hernandez, currently oversees company operations.
Founded in 2011, MERJ operates out of the island nation of Seychelles. The team at MERJ has established themselves within the digital securities sector, by attaining multiple ‘firsts’ within the industry – such as hosting an IPO through equity based security tokens.
CEO, Ed Tuohy, currently oversees company operations.
Archax to Host Polymath Security Tokens on Upcoming Exchange
With the launch of Archax’s anticipated digital assets exchange looming large, the importance of populating listed assets is crucial. What better company to fill this need than Polymath? – a seasoned company already responsible for the tokenization of more assets than nearly anyone.
A mutual need was recognized between each company, resulting in the recently announced collaboration between the two.
This aforementioned collaboration will see Archax become home to assets tokenized through Polymath. In doing so, investors in these assets will finally be able to tap into higher levels of liquidity – a trait long touted as being key to digital securities.
Archax clients benefit through an increased selection of investment opportunities.
Polymath clients benefit by seeing their tokenized securities become more attractive through new found liquidity and exposure.
Upon announcing their newly established agreement, representatives from each, Archax and Polymath, took the time to comment. The following is what each had to say on the matter.
Graeme Moore, Head of Tokenization at Polymath, stated,
“At Polymath, partnership is part of our DNA. While we make it easy for firms to create and manage security tokens, we rely on the expertise of our partners for areas like secondary trading. We’re thrilled to work with Archax to provide security token issuers with an end-to-end solution for security token creation, management, distribution, and liquidity.”
Graham Rodford, CEO of Archax, stated,
“We are building the first truly global and institutional digital securities exchange based out of London and are looking to list credible token projects from across the world. Partnerships with leading players like Polymath ensure we are integrated into the emerging tokenisation ecosystem and we look forward to working with them and their clients, providing a secondary trading venue for tokens created using their technology.”
Beyond news of these companies working together, each have found themselves attracting attention in recent days, due to other activities.
Archax was a participant of the recently hosted Security Tokens Realised conference, which was hosted in London, UK. Our own CEO, Antoine Tardif, attended this event, coming away particularly impressed with a few companies – one of these being Archax, themselves.
Polymath, on the other hand, has recently given the public a glimpse at the functionality of their on-going Polymesh project. The company has high hopes for this blockchain, tailor-built for the digital securities sector.
Operating out of London, UK, Archax is an upcoming digital asset exchange, which was founded in 2018. With the exchange’s pending launch, the team behind Archax has been hard at work, establishing various partnerships to ensure an attractive platform.
CEO, Graham Rodford, currently oversees company operations.
One of the more recognizable names in digital securities, Polymath, is a tokenization platform which was founded in 2017. From their headquarters in Toronto, Canada, Polymath has assisted in the tokenization of over 150 assets to date.
CEO, Kevin North, currently oversees company operations.