Shares of retailer Overstock.com surged Wednesday after news its subsidiary is joining the business of trading digital coins.
Shares of the online retailer of home goods and clothing shot up 23.5 percent to their highest since January 2014 and are up 65 percent for the year.
Overstock’s majority-owned subsidiary tZero, along with two financial services companies RenGen and Argon, announced Wednesday they are entering a joint venture to launch an alternative trading system for trading digital coins issued in initial coin offerings, or ICOs.
The system is “in compliance with SEC and FINRA regulations,” the release said. Overstock has a license for an alternative trading system through its acquisition of Pro Securities two years ago.
The U.S. Securities and Exchange Commission and FINRA had no comment to CNBC.
“Overstock has been very methodical on getting the necessary regulators on board,” said Tom Forte, analyst at DA Davidson, which has a buy rating on the stock. “Their process has been thorough. That said, this is still a very early stage financial services market.”
Overstock five-year performance
Patrick Byrne, CEO of Overstock, told CNBC the trading platform should be ready in roughly the next two months. “We can start moving these ICOs in and provide good, regulated trading,” he said.
“Argon gives us the deal flow,” Byrne said, while RenGen will be the market maker, providing a bid and an offer for trades.
Initial coin offerings have raised the equivalent of more than $2 billion in the last two years, according to CoinDesk, with the bulk of the fundraising occurring this year. The fundraisers, or token sales, are often seen as a more efficient way to raise capital rather than going through venture capitalists or other more traditional methods.
But the lack of regulation…