Overstock Goes Public With Blockchain Preferred Shares.

Every corporation, including title III of the JOBS act, would essentially be a publicly traded corporation. Sure there are regulatory constraints. For example, you can’t issue more than 500 shares. But these regulations exist because the foundation of why the securities acts of 1933 and 1934 were authored were based on a manual system requiring centralized locations where issuers and investors could meet. Now technology is making that framework obsolete.

I don’t expect the secondary market to vanish overnight. For anyone who uses or supplies margin will still need that infrastructure. The primary market, on the other hand, has no use for the current framework. I expect the future of the secondary market will eventually rid itself of that infrastructure as well.

Overstock.com, Inc. will allow its stockholders to purchase shares of its preferred stock, including those to be issued and traded exclusively using the bitcoin-based “T0” platform the company developed for trading equities.

The announcement marks a major step in the company’s efforts to offer a bitcoin blockchain-based trading system for equities. The company noted in a press release that it is making the offering to demonstrate its T0 platform, while providing its stockholders the opportunity to participate.

Overstock’s communications director, Judd Bagley, hinted during the Money20/20 conference in Las Vegas that the company will begin selling stock on its T0 platform, a blockchain-based platform for trading equities. He noted that T0 cannot be called a stock exchange for regulatory reasons. Instead, it is a platform for trading widgets. The first use case will be for stocks and bonds.

A Bitcoin Pioneer

Overstock has been working to reconcile fiat currency with digital currency. It is the first company to solicit qualified institutional buyers in a digital corporate bond which will trade using blockchain technology.

The company will offer up to 1 million shares of its preferred stock, and will give stockholders the chance to subscribe for shares of its Blockchain Series A Preferred, which will trade exclusively on the alternative trading system.

Stockholders will also be able to subscribe for an alternative series of its voting preferred stock that will be economically identical to the Blockchain shares but trade in the over-the-counter market.

A Two-Year Effort

“This is the culmination of over two years of true innovation and hard work,” said company CEO Patrick M. Byrne. “Through this public issuance of blockchain-based securities, the history of capital markets is entering a new era, the era of blockchain-based securities.”

The offering will be made by a distribution of one non-transferable subscription right for each 10 shares of common stock owned on the record date, plus an additional right for any balance of nine or fewer shares held.

To be considered a stockholder of record, it is necessary to own the common stock in one’s brokerage account as of 4 p.m. ET Monday, November 7, 2016.

The proposed rights offering will include an over-subscription privilege, entitling each rights holder exercising its right to purchase additional shares of preferred stock that remain unsubscribed at the expiration of the rights offering, if any.

Privileges Subject To Proration

Both basic and over-subscription privileges are subject to proration. The basic and over-subscription privileges can be exercised during the subscription period of November 15, 2016 through 5 p.m. ET on December 6, 2016, subject to proration.

Overstock can extend the offering up to an additional 30 days, in which case it would continue on a subscriptions first-in, first-served basis, with potential for pro rata allocation of shares among participants subscribing on the day, if any, on which it becomes over-subscribed.

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