tZERO Group Inc., a leader in technology solutions for capital markets, proudly announces the respective Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) approval of tZERO Digital Asset Securities as a new Special Purpose Broker-Dealer for digital asset securities custody.
This is only one of two licenses for a regulated broker-dealer digital asset security custodian that have been approved in the United States since the rules were introduced by the SEC in 2020, serving as a major milestone in tZERO’s continued journey toward the development and adoption of securities that will unleash the full potential of blockchain technology for a range of assets, including private securities, securitized real estate, art, sports and other Real World Assets and funds.
Prior to this approval, compliant digital security issuers were faced with the choice of greatly limiting or sacrificing blockchain technology features, taking their assets outside of the United States, adopting nuanced or unsupportable regulatory positions or, being unable to enable their investors to securely custody their digital asset securities with a regulated broker-dealer, relying on cumbersome workarounds with non-broker-dealer custodians.
Now, such issuers can fully utilize the power of transformational blockchain infrastructure and engage with tZERO as a one-stop shop for digital asset security issuance and a range of compliant secondary trading modalities, including continuous automated trading, auctions and block trades for a range of private assets. This step further advances tZERO’s long-standing position that many digital assets in the market constitute securities under existing legal frameworks and require fully-developed infrastructure, including broker-dealer led custody, to effectively exist and migrate into a regulated securities environment.
“We have arrived at a monumental and positive inflection point in the tZERO story,” said David Goone, the Chief Executive Officer (CEO) of tZERO. “We have been steadfast in our belief that blockchain technology is the next-generation proponent of powering capital markets. Our special purpose broker-dealer status will enable us to offer safe, secure and regulated broker-dealer digital asset custody and other new and innovative products for issuers, investors and other market participants alike.”
tZERO’s long-standing technology services and SEC-approved transfer agent unit can assist issuers to issue and transfer digitally native securities on a blockchain, and, critically, use smart contract automation to power a range of functions.
After issuance and any relevant regulatory holding periods, investors can enjoy a path to liquidity in one seamless trading environment on the tZERO Securities’ ATS, with custody, clearance and settlement by way of tZERO’s newly approved Special Purpose Broker-Dealer, eliminating the need for third party custodial relationships and balkanized, expensive and inefficient infrastructure.
“tZERO’s greatest differentiators have been its commitment to innovation from within a regulated brokerage ecosystem, advancing change through iterative and incremental regulatory engagement and through our continuous work with the agencies,” said Alan Konevsky, Executive Vice President and Chief Legal & Corporate Affairs Officer of tZERO.
“Now, as a result of this effort and philosophy, we are at the very avant-garde of regulatory innovation in the United States as one of only two broker-dealers entrusted by the regulators to custody digital asset securities. We will leverage this unique opportunity, on behalf of the digital asset industry at large, to illustrate how positive regulatory clarity can produce real-world innovation, novel products and real commercialization across of range of traditional financial and real world assets — as we advance towards an integrated regulated infrastructure layer and connective tissue for compliant digital assets,” added Konevsky.
tZERO and its broker-dealer subsidiaries expect to bring this new service to market in early 2025, starting with the full digitization of tZERO’s Series-A preferred equity security (TZROP) and other potential issuers.
TZROP was issued in a private placement in August 2018 and, in January 2019, it pioneered the way for private securities to trade on the tZERO Securities ATS on a regulated, continuous and automated marketplace. Now tZERO’s flagship trading asset will be the first digital asset security to be traded on the tZERO Securities ATS, demonstrative of how this regulatory approval will positively upgrade the tZERO Securities ATS trading ecosystem.
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