FINRA grants tokenization firm tZERO approval to trade corporate debt

Tokenization firm tZERO Group’s broker-dealer subsidiary has received regulatory approval from FINRA to facilitate secondary trading in corporate debt securities on its alternative trading system (ATS).

“This milestone reinforces the firm’s role as a leader in modernizing how capital is raised, traded, and owned,” the firm said in a statement on Tuesday.

tZERO Securities, the subsidiary, has already received approval to list primary offerings of corporate debt and corporate equity securities, including the online sale and resale of over-the-counter equities to retail investors, according to the announcement.

The move comes amid rising interest in tokenized assets. BlackRock CEO Larry Fink, for instance, has said that nearly every investment class could conceivably move onchain.

tZERO Securities specializes in the issuance, trading, and custody of digital securities — i.e., tokenized onchain assets — and traditional private securities. The firm holds FINRA and SIPC memberships, and last year received the second SEC license to enable end-to-end digital asset securities lifecycle support, including custody for assets like securitized real estate and NFTs.

The Financial Industry Regulatory Authority (better known as FINRA) is a private, non-profit, self-regulatory organization in the U.S. that oversees broker-dealers, ensuring they comply with federal securities laws and industry standards to protect investors and maintain market integrity.

tZERO was a particularly early mover in the tokenization space, having launched in 2014 as a subsidiary of e-commerce firm Overstock. Years before firms like Galaxy moved to tokenize their equity, Overstock was experimenting with issuing preferred shares as a security token.

That said, being early isn’t always appreciated. In 2019, for instance, former Overstock CEO Patrick Byrne was sued by class action investors in part due to his growing interest in “blockchain.” The firm was also subpoenaed by the Securities and Exchange Commission.

“By integrating corporate debt, tZERO is not only addressing growing institutional and retail demand for diverse, digitized assets — including tokenized real-world assets — but we’re also providing issuers a way to give their investors a much-needed secondary liquidity option,” tZERO Securities President Alex Vlastakis said.