Last week, tZERO announced that its securities tokens (TZROP) are now available to be traded to non-accredited investors, as per Rule 144 of the Securities Act of 1933.
Despite the launch, the platform offers limited functionality, Overstock's OSTKO security token and TZROP comprising the only markets that are currently available for non-accredited investors to trade. Traders are only able to place limit and market orders to purhcase security tokens using fiat currency, with tZERO's markets open for trade during weekdays between 9:30am and 4:00pm EDT.
Signing up to trade on tZERO requires submitting identifying documentation to the platform, with verification taking several days for the company to complete. As the platform develops and evolves, however, more functionality is to be expected.
TZROP Tokens to Generate Divident for Investors
TZROP were first issued via a private placement during August 2018, and have been tradable among accredited investors since January of this year. The tokens are now exclusively tradable on the PRO Securities alternative trading system (ATS) to investors who hold an account with Dinosaur Financial - a broker-dealer headquartered in New York.
According to a press release, the TZROP token offers investors “direct exposure to tZERO’s revenue growth through its quarterly dividend model,” with tZERO pledging to distribute 10% of its adjusted gross revenue to holders of its security token . Investors can reportedly choose to receive dividends in the form of BTC, ETH, TZROP, or U.S. dollars.
However, the release notes that the distribution of dividends is subject to approval from tZERO’s board of directors, and Delaware law.
Peer-to-Peer Trading of TZROP Tokens Prohibited
TZERO emphasized that peer-to-peer transfers of TZROP have not been authorized, asserting that TZROP holders must exclusively resell tokens “on the PRO Securities' [...] ATS only through a brokerage account established with Dino, a subscriber to the ATS, with clearing and custody provided by Electronic Transaction Clearing, a registered broker-dealer, and Computershare, as transfer agent.”
To comply with the company’s regulatory obligations, tZERO also reserves the right to prohibit tZERO security token holders from moving TZROP from Dinosaur Financial brokerage accounts to personal wallets.
The chief executive officer of tZERO, Saum Noursalehi, stated:
“Following the one-year anniversary of the close of our security token offering, non-accredited investors now have the ability to purchase and trade in our security tokens. Today marks another milestone as we further democratize access to all investors, regardless of net worth, can invest in the business opportunity of a blockchain-based capital market.”
TZERO Receives Patent for ‘TOME’ Technology
On Aug. 6, 2019, tZERO was awarded a patent for a process for recording trading data on a public blockchain, dubbed the “Time Ordered Merkle Epoch (TOME) methodology.”
According to the company’s announcement:
TOME is a base-layer technology that uses digital signatures to record and verify time-series data such as trades, executions and settlements. This technology enables low-latency systems, including traditional matching engines or private blockchain ledgers, to be anchored into immutable public blockchain ledgers.
TZERO plans to incorporate TOME into its product suite, in addition to licensing the technology to other firms.