Last week the regulator declared effective an Overstock submission about the company’s intention to issue digital securities, which the e-seller may issue on a platform that uses the same technology as the bitcoin blockchain accounting system, according to a public filing Friday by Overstock.
The development means the e-seller can now move forward with its plans if it chooses to issue digital securities, it said. The platform the company would issue digital shares on would not be the same as the bitcoin blockchain, but is expected to use the same technology to verify the shares' authenticity, the company said.
“As described in the registration statement, with respect to any securities of the company that are issued as digital securities, the ownership and transfer of such digital securities will be recorded on a proprietary ledger that will be publicly distributed,” Overstock said Friday. “The validity of the publicly available copies of the proprietary ledger can be mathematically proven utilizing cryptographically secured distributed ledger network technology, which the company currently anticipates will be the technology used by the bitcoin blockchain.”
In its April registration statement, Overstock had announced its intention to issue up to $500 million in shares through the platform.
When traded, the digital securities would settle more quickly than traditional stocks, the filing said.
“Digital securities are designed to enable trades to settle immediately or nearly immediately, unlike traditional securities, such as shares of our common stock, trades of which settle on the third day following the day the money is exchanged,” the April S-3 filing said.
The digital securities would also allow someone to hold shares through a broker-dealer third party, the filing said.
The filing said digital securities would be traded on a closed market system, separate from exchanges such as the Nasdaq Global Market. Overstock acknowledged several risks associated with its “novel and untested” platform, including the possibility of regulatory changes, cybertheft and market price manipulation.
Based in Salt Lake City, Utah, Overstock is an online retailer of various household products, including excess supply from manufacturers. The company employs about 1,500 people, according to its website.
--Editing by Edrienne Su.
