2025 is shaping up to be a busy year for digital securities via blockchain, and tZERO says it is well-positioned to contribute to the growth of a unique method of providing primary raises, recapitalizations, and secondary trading.
Senior Director of Business and Capital Development Ryan Zega said tZERO is one of a few regulated and licensed firms supporting traditional trading of private securities and digital securities via the blockchain. The latter can come in the form of regular security tokens and NFTs with such benefits as fractionalized ownership, improved tracking, and accelerated settlement. tZERO owns a FINRA-member broker-dealer and an SEC-registered alternative trading system (ATS). That positions them uniquely in the marketplace.
“On the capital raise side, we offer a white label tech platform that largely supports exempt offerings, Reg D’s, Reg A plus, crowdfunding…” Zega said. “We can be a passive broker-dealer of record, providing that white label investor checkout experience, integrated KYC, AML accreditation, payment processing, and subscription agreement signing services.”
On Nov. 25, tZERO launched tZERO Digital Asset Securities, a special-purpose broker-dealer for digital asset securities custody. Investors can now open their custodial brokerage account with tZERO Digital Asset Securities. Zega said it took nearly four years of work, as they worked with regulators to define what a native, on-chain experience is, as well as compliance and best practices. tZERO can issue securities on-chain and serve as custodian.
Zega said the ATS delivers key value for clients and investors by allowing shares to trade more broadly. It’s available to investors in the United States and 52 other jurisdictions. That allows investors access to unique opportunities that were once only available to a few, like art, racehorses and real estate.
The St. Regis Aspen Resort in Aspen, Col., is an example. In 2010, it was purchased by real estate firm Elevated Returns and extensively renovated. In 2018, Aspen Digital issued shares representing an 18.9% indirect interest in the property to accredited investors in an offering exempt from registration under Regulation D. Two years later, Elevated Returns partnered with tZERO to list the ASPD digital security, the first Tezos-based digital security traded on a regulated platform.
In 2021, Exodus Movement closed a $75M Regulation A offering for the Exodus Wallet, a non-custodial cryptocurrency software platform focused on facilitating trading for all levels of user sophistication. Months later, they announced their intent to trade on tZERO’s ATS and began onboarding investors. It is digitized on the Algorand blockchain.
“This offering reinforces our core belief that if you democratize financial systems and make finance easy, people will participate and benefit from opportunities traditionally available to only the wealthy elite,” Exodus co-founder and CEO JP Richardson said. “Retail investors who bought a couple of shares got the exact same deal as billionaires. That felt pretty cool and true to the spirit of blockchain and the crypto community.”
Zega said companies like Exodus work with tZERO because they have blockchain at their core. It’s a natural extension of their philosophy. Others covet the optionality of secondary trading or tZERO’s more traditional services.
“We’re seeing lots of alternative asset classes where they’re uniquely positioned to have access to assets,” Zega said. “They want to challenge an incumbent because they believe they have created a better product. They like tZERO because of our broker/dealer license and technology.”
Zega said the industry awaits clarity on how to treat unregulated assets. Are they securities? Commodities? If they’re securities, were they issued compliantly? If not, what can be done to make them compliant?
Once regulators create those guardrails, market participants know how they can be compliantly handled. Regulated counterparties then understand how to address capital raising, secondary trading, and regulatory concerns.
2025 brings a preferred equity product. tZERO is also working with several clients to issue on-chain.
“We are working with several different partners that are looking to syndicate other alternative asset classes that are going to be on-chain,” Zega concluded.