Overstock Shares Soar On Cryptocurrency Trading Announcement

In retail news, it’s a good day to be Overstock.com. According to reports from CNBC, the market is reacting favorably to the news that Overstock’s subsidiary tZero is joining the business of trading digital coins. The 23.5 percent leap takes its stock price to its highest point since January 2014, moving its annual increase to 65 percent on the whole.

tZero, in partnership with financial services companies RenGen and Argon, announced it is moving to launch an alternative trading system for trading digital coins issued in initial coin offerings (ICOs).

In a news release by Overstock, the company explained the system is compliant with both U.S. Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) requirements. Overstock has a license for an alternative trading system through its acquisition of Pro Securities two years ago, according to CNBC. Neither the SEC nor FINRA has offered any comment at this point.

“Overstock has been very methodical on getting the necessary regulators on board,” said Tom Forte, analyst at employee-owned broker-dealer DA Davidson, which has a buy rating on the stock. “Their process has been thorough. That said, this is still a very early-stage financial services market.”

Patrick Byrne, CEO of Overstock, is a long-time digital currency enthusiast. He told CNBC the platform should be ready for action within the next few months.

“We can start moving these ICOs in and provide good, regulated trading,” Byrne said. “Argon gives us the deal flow.”

RenGen will be the market maker, providing a bid and an offer for trades.

ICOs have been big business for the last 24 months, garnering $2 billion in raised funds. Proponents favor them because they are seen as a better way to bring in funding than looking to traditional venture capital-controlled channels.

However, the great limitation for ICOs among U.S.-based investors is a lack of regulation clearly governing them. The SEC indicated over the summer that securities laws might apply to the digital coins. It also issued an investor bulletin warning of the risks of investing in the coin offerings. The news out of Overstock is that something may soon begin to calm U.S. investor concerns.

“I think this is exactly the kind of platform for facilitating security token trading that the SEC wants to see developed,” said Ryan Schoen, senior financial services policy analyst at stock brokerage firm Washington Analysis. “This move clearly increases pressure on existing exchanges that traffic in tokens that could be deemed securities to come into compliance with SEC and FINRA regulations.”