By Jeff John Roberts
September 27, 2017

When the Securities and Exchange Commission cracked down on so-called initial coin offerings (ICOs) in July, some feared it would be the end of a novel way for companies to raise money by selling digital tokens. As it turns out, the SEC ruling may mark the true beginning of the ICO era.

That’s because Wall Street now has its licensed exchange where traders can buy or sell digital tokens in the same way as traditional shares of stock.

The exchange, run by tZero, a subsidiary of retailer Overstock, will allow companies to trade tokens using blockchain technology (a type of software that creates a permanent, tamper-proof record of transactions) without fear of legal trouble from the SEC or FINRA.

This is important because the SEC’s landmark announcement this summer put companies on notice that, in many cases, tokens generated in an ICO would be considered a security and therefore fall under a pile of regulations. Prior to the ruling, some companies conducted ICOs under the pretext that the tokens they sold to the public—and that most people treated as a speculative investment—were simply a means to obtain services from a website.

Now, the launch of the tZero exchange, which will presumably make money from token listings and trade commissions, means the regulatory infrastructure is in place for a token version of the NYSE or the NASDAQ.

It’s a fair question, of course, whether anyone will actually use the exchange (which is technically an Alternate Trading System or ATS, also known as a dark pool). While tZero has introduced technological breakthroughs to Wall Street in the past—most notably by creating the first blockchain-based security in 2015—those breakthroughs haven’t really gone past the proof-of-concept stage.

The new token exchange is more likely to take off, however, because tZERO has structured it as a joint venture with the financial firm RenGen, which will provide liquidity, and the advisory firm Argon Group, which will help draw in clients and generate leads of companies who might participate.

All of this also amounts to another bold move by Overstock’s iconoclastic CEO, Patrick Byrne.

Byrne, who has a PhD in philosophy and is an avid student of economics, has for years undertaken bold experiments with crypto-currency. This includes making Overstock one of the first companies to accept bitcoin and, more recently, arranging for the retailer to accept a wide variety of other digital currencies such as Ethereum and Litecoin.

Speaking with Fortune at tZero’s office near Wall Street, Byrne predicted that major companies like Nike will eventually turn to tokens, instead of shares, as a way to raise money and distribute ownership.

The idea is not far-fetched given that blockchain, which is also being used in trials by banks and the shipping industry, provides a faster and more secure form of record-keeping than conventional tools. The technology also got another big spur when the state of Delaware, which is where most U.S. incorporate, passed a law to let companies put lists of shareholders and other records on a blockchain.

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