Overstock Announces ATS For Regulated Token Exchanges

ICOs have been getting a hard time of late, with commentators and regulators worldwide stepping in to warn consumers and investors about the pitfalls of dealing in these unregulated nearly securities.

But the market for ICOs could be about to get a whole lot more transparent, with the announcement today from Overstock of its intention to launch a new exchange service, specifically for regulated token trading.

The project is being pioneered by Overstock’s blockchain subsidiary, Medici, and will represent a world-first for an alternative trading system (ATS) specializing in cryptocurrencies and tokens.

Crucially, the exchange will operate in compliance with U.S. securities law, effectively treating listed tokens as securities. This is in keeping with declarations from the SEC that some ICOs were in fact securities, which required approval and compliance as with any other publicly traded instrument.

The new ATS is to be regulated by the SEC and the Financial Industry Regulatory Authority, and will be run as a joint venture between Medici and partners RenGen and Argon Group.

This regulation will enable the ATS to compete with larger, more established securities exchanges like the Nasdaq and NYSE, on a fully compliant, regulated basis. As a result, it has been welcomed as a potentially significant development in the trajectory of the token trading space.

The announcement follows on from earlier indications that Overstock was looking to deploy blockchain solutions originally developed to facilitate traditional securities trading in new and innovative ways.

The decision to pivot the product toward token exchange followed on from the SEC’s decision to classify some ICOs as securities, a development that provided Overstock with a new, unique angle to their service.

The market for ICOs has exploded in 2017, raising over $2 billion thus far through issuing cryptocurrency tokens for the first time.

Investors buy these tokens in the hope of an emerging secondary market, viewing investing in low-cost ICOs as a potentially highly lucrative future investment.

However, many commentators have warned that the unregulated status of many ICOs has made it a risky environment for investors. The Overstock ATS would go some way toward solving these concerns, and has already been welcomed by industry analysts as a major step forward in cleaning up the ICO market.