Overstock is broadening the security token market for tZERO to retail investors starting next week.
tZERO Retail Investors
According to Saum Noursalehi, CEO of tZERO, retail investors will have access to the platform on Aug. 12, which marks the official end to tZERO’s one year lock-up period for their 2018 security token offering (STO).
Despite launching in January, only accredited investors have had access to the trading platform, which is primarily limited to institutions. Retail investors will be able to trade with the limited selection of tokens, which thus far includes tZERO’s native equity token TZEROP issued through the STO and Overstock’s series A-1 preferred stock.
Parent company Overstock hopes to boost interest and activity on the tZERO platform by issuing more digital shares to shareholders as a sort of dividend.
Noursalehi commented on the digital share dividend, saying,
“It’s a nice bonus to our shareholders and it serves the purpose of getting a lot of adoption on the platform. There is a lot of focus on liquidity.”
While Overstock may welcome the influx of retail investors on to tZERO and the trading of digital shares, the company is still struggling to find a way to generate profit. The most recent quarterly filing revealed tZERO posted a $10 million net loss in Q2 2019, more than double that of Q2 2018 which produced a loss of $4.6 million.
Overstock claims to be committed to the development of Medici, its blockchain investment unit that includes tZERO and a few other projects.
However, Jonathan Johnson, president of Medici, said in an earnings call on Aug. 8 that the company is scaling back on its aggressiveness towards growing the blockchain division,
“We don’t expect to grow the [businesses] as aggressively as we have in the past.”
Johnson included that the “symbiotic nature” of their interlocking business model is “really blossoming,” despite the $10 million loss incurred over the second quarter of this year.
tZREO is hoping to generate a boost in interest by pursuing the notoriously difficult to acquire New York Department of Financial Services’ virtual currency license, also known as the BitLicense.
According to tZERO CEO Noursalehi during the same conference call,
“The New York BitLicense is challenging to get, we are working on it, we’re hoping to get it in the next six months.”
Noursalehi expects tZERO to see a boost of up to 50,000 investors once the platform opens to the retail market, based upon investors who previously bought Overstock shares now being supplied with the digital dividend.
Nonetheless, the company remains under investigation by the US Securities & Exchange Commission (SEC) for the tZERO STO, which has had ramifications for the parent company Overstock. Patrick Byrne, CEO of Overstock, told CNN in June that the pending SEC investigation destroyed his attempt to sell the company by tanking in any interesting in an auction.