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Ex-Overstock Chairman Calls For U.S. Regulatory Clarity

June 14, 2018

 

Overstock.com is one of the few publicly-traded companies that are riding the crypto wave, and despite this year’s market performance of coins, their former chairman is touting the benefits. Jonathan Johnson, who remains a board member of the company explained that cryptocurrencies are a growing segment of the online retailer’s business at an address to the Heritage Foundation, a conservative think tank in Washington, D.C.

 

“We have somewhere between $68,000 and $120,000 a week in cryptocurrency revenues; people buying sheets and toasters using bitcoin or ethereum or other coins.” This currently makes up only about 0.2 percent of the company’s total revenue stream, but he emphasized that the figure is “growing” despite declining crypto valuations.

 

Cryptocurrency Stock Correlation

 

Overstock's market performance has been correlated to the cryptocurrency market. Last fall, Overstock’s share price surged with the bitcoin bubble from approximately $30 on October 1 to nearly $87 by early January. It leveled off to the $60 range by early March, and has since dropped further.

 

The news that tZero, an Overstock subsidiary, had been issued a subpoena by the Securities and Exchange Commission regarding its $250 million initial coin offering (ICO) hurt the stock price badly. It is now nearing $40. Overstock also has a blockchain-focused venture arm called Medici Ventures.

 

Crypto is like a Cash Transaction

 

“We pay a processing fee for credit cards, and we employ about 40 people in our fraud department. That’s a cost of doing business with credit cards. When we take cryptocurrency, we have a very small transaction fee with Coinbase, much smaller than our credit card processing fee, and we have no fraud prevention department. It’s like a cash transaction. For us, that is a much cheaper way of doing business.”

 

U.S. regulatory clarity needed

 

Johnson insinuated that regulatory uncertainty in the United States is constraining the use and development of blockchain-based technologies and capital formation methods, such as initial coin offerings. The SEC’s reliance on the Howey Test in determining when a token offering is and is not a security has created too much uncertainty in the space.

 

“Medici Ventures is not invested in a single ICO, in large part because the regulation around them is still very hazy. We should not be regulating this technology. If there are uses of it that need regulation, maybe."

 

 

 

By: BGN Editorial Staff

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