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FINRA Approves tZERO Broker-Dealer Service

US Regulators Possibly Paved the Way for Crypto Broker Operations

tZERO, the blockchain arm of  Overstock, has been granted a broker-dealer service license. The blockchain firm got the approval from the U.S Financial Industry Regulatory Authority (FINRA).

All Systems Go

Per the press release, FINRA approval means that tZERO now has the freedom to operate a brokerage service to American retail customers through the new subsidiary, which it has dubbed TZERO Markets. The blockchain company added that it would also be looking into offering issuers with placement agents and investment banking services related to capital raising activities.

In the release, Saum Noursaleh, tZERO’s chief executive, called the milestone an essential one that will help the firm continue on its expansion path.

“Through tZERO Markets, we will establish a direct relationship with our customers, while also offering a streamlined experience for onboarding and trading digital securities. We expect tZERO Markets to launch its services in a couple of months,” Noursaleh added.

Noursaleh added that the company would launch the tZERO Markets platform in the coming months. While the company has gotten approval from the Securities and Exchange Commission (SEC), the FINRA nod takes it past the last regulatory hurdle.

2020 Looks Good for tZERO — and Overstock

tZERO has been on a momentous shift in 2020. The firm is one of the few blockchain companies to survive the coronavirus pandemic almost unscathed, although it had to sacrifice some part of its workforce to get that done.

In April, tZERO completed a $5 million capital raise, with the funds coming from Hong Kong-based equity firm GoldenSand Capital. While the company didn’t explain how it planned to use the cash, the move signaled that it was liquid enough to keep operating in the long term.

More good news came for tZERO in the second quarter of the year. In June, the firm announced that it had recorded its best month on record in May. Per the firm’s announcement, May saw it record 423,000 digital security trades.

Compared with May 2019, the month saw a 400 percent increase in trading volume on the platform. Year-to-date performance as of June 1 was also an impressive 50 percent gain. The tZERO crypto app also saw a 125 percent surge in user base for the month, leading to an 85 percent increase for the year.

All of these have benefited Overstock’s bottom line and share price as well. The internet company has seen a significant boom in its business from its blockchain subsidiaries, as a statement on its Q2 financial performance showed that it managed triple-digit growth compared to the same period last year. As the company explained, total net revenue stood at $783 million — surging 109 percent over Q2 2019. Gross profit was $180 million – a 321 basis points increase over Q2 2019. Overstock also touted various aspects of its crypto investment, including and especially tZERO.

This new approval has already had positive effects on Overstock. Investopedia reported yesterday that the approval sent the firm’s stock surging 20 percent during Thursday’s session.

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      Jimmy has been following the development of blockchain for several years, and he is optimistic about its potential to democratize the financial system.