Overstock.com announced today that its capital market arm subsidiary Medici, a blockchain-focused company, is launching an alternative trading system (ATS) exchange for cryptocurrency coins and tokens such as bitcoin, ethereum, and others categorized as securities in the US by the SEC.
The exchange is a joint venture between RenGen, who will act as the market maker, and Argon Group, an ICO specialist with experience in capital funding. The trading system will be regulated by the SEC and the Financial Industry Regulatory Authority (FINRA).
This is big news in the crypto space, as it will allow the ATS to offer legally approved, regulated alternative investments to major securities exchanges such as the Nasdaq and New York Stock Exchange (NYSE). This is the first step into opening up a much needed market of this type.
As a result of the news, Overstock’s stock price surged 24%, indicating the market is ready and approves of such a measure!
This initiative all started back in June when Overstock had mentioned that they were exploring new opportunities to utilize blockchain technology in a stock market type of environment. With the SEC’s recent decision to classify some coins and cryptocurrency tokens as securities, Overstock found themselves in the perfect position to capitalize on this new marketplace.
Cryptocurrency investments are skyrocketing, with more than $2 billion already invested this year. Argon believes that the new ATS could even surpass $2 billion in trading volume within the next 12 months, with $4 billion in close reach.
The advantage of such a market operated by big players such as Argon, RenGen and Overstock is that it adds legitimacy, liquidity, and efficiency by reducing time and transaction fees typical of the traditional exchanges such as the NYSE and Nasdaq. By utilizing blockchain technology, clearing time for execution of trades will be reduced dramatically from a 3 day waiting period to just 15 minutes!
It will be interesting to see how this progresses, and how ICO issuers will adhere to the SEC’s new definition of a security. They must decide whether they will honor these stipulations to be included in such regulated exchanges that are publicly traded resulting in increased volume and liquidity.