In a major announcement last week, tZERO, the blockchain-powered digital security trading platform, said it received approval from the Financial Industry Regulatory Authority (FINRA) for its subsidiary retail broker-dealer, tZERO Markets.
With this approval, tZERO Markets can now provide investment banking services to small growth companies that want to tokenize their business.
This new development is nothing short of groundbreaking for small businesses and for investors looking for alternative sources of income—especially in a zero-rate environment.
Most small businesses can’t afford to pay Wall Street fees to access investors and raise capital. But thanks to blockchain technology, almost any business can now raise money by tokenizing part of an asset. That means it’s easier and cheaper for them to sell equity ownership of their business.
For investors, security tokens provide an equity share of a company during its early growth stages—like investing in Facebook before it was a publicly traded company.
tZERO’s goal is to bring Wall Street to Main Street by giving smaller companies access to capital and trading platforms.
tZERO CEO Saum Noursalehi summed up the company’s goal:
“From digitizing a private company’s ownership records to trading through an institutional-grade order-management system, tZERO has built an end-to-end ecosystem that democratizes access to private assets.”
Keep in mind, the “status quo” has existed for decades on Wall Street. tZero is chipping away at this entrenched, expensive system.
To raise capital through a traditional initial public offering (IPOs), a company generally needs to have a large revenue stream. Otherwise, it’s hard to justify Wall Street’s high fees. This shuts out most small businesses looking to expand.
With a security token offering (STO), the process is much more efficient and costs a fraction of the cost to IPO. And the lockup period—the time until the average investor can buy or sell an asset after an IPO—is much shorter. It’s usually around one year for a security token offering (STO)… a big improvement vs. the three- to seven-year lockup period that most IPOs use.
At Curzio Research, we know about this revolutionary process first-hand. Last year, we raised capital through the Curzio Equity Owners (CEO) security token. This token gives investors an equity stake in our business. The company recently paid out its first dividend to token owners.
In a few weeks, the CEO token will be available for free trading on an international exchange… just over a year after the original offering to investors.
It’s an exciting time for small businesses and investors around the world.
We’ve told readers about the huge progress happening in the STO space, including the tokenization of real estate, NBA contracts, and even individuals. As the ecosystem builds out, it’s only going to get easier and more efficient to raise capital and tokenize assets.
tZERO expects its new FINRA-approved platform to launch within the next couple of months. Going forward, the company will be able to assist clients in tokenizing all kinds of assets.
As security tokens continue to evolve, more small companies will be able to raise capital cheaply. And investors will have access to these investments at early stages.
The timing is perfect. Investors are desperate for more opportunities to grow and protect their wealth. Interest rates are stuck near zero… while the number of public companies continue to shrink.
Meanwhile, plenty of small businesses need capital to grow. tZero Markets will help bridge this gap between investors and small companies.
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