Overstock gets into crypto with tZero
Last year was a big year for cryptocurrency, and a busy year for cryptocurrency and security token platform tZERO.
In March and November, Bitcoin hit $60,000, Ether multiplied its value by more than five times from January 2021 to November, and the early weeks of 2022 have seen both drop more than 50 percent from their all-time highs. Then Saum Noursalehi resigned as tZERO CEO in August.
At that point, Chief Legal Officer Alan Konevsky took over CEO duties, though the company has since hired David Goone as a full-time replacement.
“tZERO is a terrific company with a terrific mission. Saum was a great colleague, and I was honored to take over on an interim basis,” Konevsky says. “As the board was looking for a permanent CEO, I think the next generation of leadership at the CLO level is going to be critical, as it comes with strategic vision…
“That’s a process that’s important, it’s a process that takes time. Our board, our shareholders, and our management team, including me, have been very involved in making sure that the company gets it right, and we’re confident that that’ll come to the resolution quickly.”
tZERO started as a blockchain subsidiary of Salt Lake City-based Overstock.com. In 2017, it announced the initial coin offering of its tZERO security token. Then in April, Overstock.com announced a blockchain fund transaction with Utah-based Pelion Venture Partners, converting Medici Ventures, Overstock’s blockchain-focused subsidiary containing tZero, to a limited partnership managed by Pelion, which was “to act as the general partner of the fund.”
Konevsky says half of tZero’s headcount is in Utah, as is most of its technology and resources.
“We’re delighted to have access to their rich base of talent and innovation. Our plurality shareholder, Pelion Ventures is Utah-based, Overstock is Utah-based,” he says. “And so while we have some functions and folks kind of distributed in other parts of the country, the connection continues to be very strong, and we look forward to nurturing and growing it.”
In June of 2021, tZERO launched a new version of its crypto app, promising higher buy limits, more cryptocurrencies, and faster settlement times. Then in December, the tZERO crypto app launched support of three more coins—Polygon (MATIC), Enjin Coin (ENJ), and Maker (MKR)—bringing its crypto offerings to 18, a 350 percent increase year-over-year.
In a blog post from earlier this month outlining the year ahead, tZERO management reported increases of roughly 400 percent to its private digital security trading and cryptocurrency user base.
Konevsky is expecting big things in 2022. On Jan. 28, tZERO announced that it had received approval for its rulebook for its Boston Security Token Exchange LLC (BSTX), a joint venture with BOX Digital Markets, which the company says will be “the nation’s first regulated blockchain-enabled securities exchange,” offering three main benefits to US capital markets: faster settlements, blockchain-secured market data and access for early-stage companies.
Konevsky also sees movement in the NFT space, blockchain developments, crypto regulation, and the use of cryptocurrency as a payment source. “We continue to be laser-focused on adding more assets, both securities and cryptocurrencies, providing our users with a harmonized trading experience, optimizing a lot of the back-office processes, including integrating clearing operations and looking toward other opportunities with NFTs.
“We believe a number of NFTs are securities, and we are a natural platform and trading partner for those assets. And we formed partnerships to that end to develop those opportunities. We’re also thinking about non-security NFTs and how we can integrate those into our one-stop shopping approach,” Konevsky says of tZERO’s focus going into 2022. “We also continue to be laser-focused on leading with regulatory compliance. The market has been evolving in the direction that we’ve anticipated from the beginning and that is that regulation is critical, and a number of these assets are, or would be, regulated.”
The NFT space is one area that tZERO could make strides in 2022. In late June of last year, tZERO announced a partnership with Wazuzu “to bring NFTs and security tokens to market.”
Konevsky says he believes that NFTs have the potential to be “far bigger than crypto” as generations mature.
“You’re talking about a real kind of consumer retail footprint. Because you’re talking about stuff, you’re talking about retail, you’re talking about items,” he says.
tZERO shared a Linkedin post in January from Blockworks citing 2022 as the potential “Year of the Blockchain Bridge,” according to JPMorgan analysts Kenneth Worthington and Reginald Smith. With upgrades to Ethereum in the works, other blockchains like Cardano, Solana, and Polkadot advancing, 2022 could see greater interoperability and financial tokenization, Smith and Worthington say.
Konevsky does wonder if Ethereum could overtake Bitcoin as the top cryptocurrency due to its “industrial application,” though, as of the end of January, Bitcoin’s market cap was still more than double that of Ethereum.
Konevsky also mentioned potential future uses of blockchain, from tracking land titles to government voting. “There are a couple of broader perspectives. One is decentralizing technology. You’re going from a centrally-ran spreadsheet to a spreadsheet that is decentralized, immutable, isn’t susceptible to central counterparty failure, too big to fail, and isn’t susceptible to manipulation and doesn’t require layers of intermediation,” he says. “So that’s a very important part of it. And the use cases of it, whether it was land title, inventory tracking, payments, is tremendous.”
Cryptocurrency, blockchain, and NFTs might sound like a different language to some. Konevsky says that while he can’t predict the future, he sees a significant future for blockchain technology.
“Really thinking about the longer-term role that this technology and these assets will play, from that perspective. Payment rails, inflation protection, and looking at the types of instruments and types of solutions and types of innovators in the market that are focused on durable long term innovation that is going to deliver secular benefits to our economy and the global footprint,” Konevsky said.
“And really being focused on that type of innovation, because you can never predict the future, but that’s more likely than other options to be durable.”
Note from the editor: A previous version of this article stated that tZero was still looking for a new CEO. As of 2/22, tZero has appointed David Goone. This change has been reflected in the article.