Overstock Gains SEC Approval on Filing for $500M in Digital Securities

Online retailer Overstock has received approval from the US Securities and Exchange Commission (SEC) for its S-3 filing to issue publicly traded shares on the Bitcoin blockchain, according to a report by Bitcoin Magazine.

Overstock recently filed an S-3 form, which permits it offer up to $500 million of common stock, preferred stock, depositary shares, warrants, debt securities or combination, which could all be in the form of digital securities.

In its application, Overstock acknowledges that there are risks associated in trading the digital securities.

Overstock notes in the form that these digital securities will be:

…uncertificated securities, the ownership and transfer of which are recorded on a cryptographically-secured distributed ledger system using technology similar to (or the same as) the distributed ledger technology used for trading digital currencies…

The company reveals that its digital securities may be traded exclusively on a closed alternative trading system (ATS) with limited volume and liquidity.

Overstock also made the following admissions in its application regarding the digital securities:

  • The distributed ledger technology used by the ATS is novel and untested with respect to digital securities.
  • The private cryptographic keys representing digital securities could be stolen.
  • The number of securities traded on a digital securities ATS may be very small, making the market price more easily manipulated.
  • The payment mechanics for digital securities are novel and untested.
  • An ATS is not a stock exchange and has no listing requirements for issuers or for the securities traded.
  • The price of the our digital securities, even when equity securities are issued that rank on a parity with our common stock, is not pegged to the value of Overstock’s common stock.

In August, Overstock officially launched its blockchain-based trading platform, called t0.

t0 is utilizing blockchain technology to offer customized private digital assets, public securities and short-selling tokens.

Overstock also revealed in August that it was in the process of acquiring a group of fintech companies, including Speedroute, a company that routes approximately 2.5 percent of U.S. equity order flow.