Securities broker-dealer, Keystone Capital Corporation, has selected t0’s blockchain-based trading technology to provide brokerage services for market participants seeking to trade blockchain securities.
This is part of Keystone Capital’s brokerage service’s support of a blockchain preferred share offering from Overstock.com Inc., the parent company of t0 which has been working to reconcile fiat currency and the bitcoin blockchain.
Overstock became the first company to solicit qualified institutional buyers in a digital corporate bond which will trade using the same technology that underlies cryptocurrencies such as bitcoin.
Its CEO, Patrick M. Byrne, said t0 has been working on a blockchain version of Wall Street that will enable Overstock demonstrate its system by issuing a security of its own on the technology it is creating.
According to the new arrangement, t0 technology will allow investors to create digital trading accounts with Keystone upon commencement of Overstock’s issuance subscription period which will be announced later.
The U.S. Securities and Exchange Commission SEC declared Overstock.com’s S-3 filing effective in December 2015 to give it the ability to issue blockchain shares in a public offering. In the SEC filing, the company said it plans to offer up to $500 million in common stock, preferred stock, depositary shares, warrants and units, in addition to debt securities, using distributed ledger technology.
Despite t0 has pioneered the effort to bring greater efficiency and transparency to capital markets through the integration of distributed ledger technology, using it to distribute shares may pose a challenge to the banks and securities firms that earn fees for handling stock offerings.
It is not certain that Overstock’s plan will work as there are questions over whether there will be enough supply and demand to form a market since the blockchain-based shares won’t be traded on a public market. However, if it works, it could set a blueprint for how businesses sell shares in initial public offerings or secondary offerings.
Image from Shutterstock.