Overstock Is Set to Finally Pay Out Its Digital Security Shareholder Dividend
The blockchain-friendly online retailer is planning to distribute its long-delayed digital asset shareholder dividend on May 19.
:format(jpg)/cloudfront-us-east-1.images.arcpublishing.com/coindesk/WNZJLQYOHRDSVM7D5HYP2QQUKU.jpg)
Former Overstock CEO Patrick Byrne (Credit: CoinDesk archives)
Overstock.com plans to distribute its long-delayed "digital security" shareholder dividend on May 19.
Shareholders will receive one Digital Voting Series A-1 Preferred Stock (OSTKO) for every 10 of the online retailer’s shares they hold on April 27, the record date, according to Overstock’s Tuesday press release. OSKTO is a “digitally enhanced security” that trades on affiliate tZERO’s blockchain-backed platform – the only trading system that can support it.
If the distribution goes without a hitch, it may validate a corporate gambit whose creator, former Overstock CEO Patrick Byrne, considered revolutionary. Byrne thought the blockchain dividend could drive growth for tZERO’s blockchain trading system and simultaneously “expose the slop” he said was inherent to Wall Street’s capital markets.
Byrne resigned less than a month after his proposal’s July 2019 reveal. Overstock’s new leadership continued to push for blockchain dividends, calling it “of great importance to the Company’s blockchain strategy,” in Securities and Exchange Commission (SEC) regulatory filings.
“In particular, we believe the successful issuance of the Dividend will demonstrate to other issuers and market participants that this technology is scalable and has significant benefits to all market participants,” CEO Jonathan Johnson and chairwoman of the board Allison H. Abraham wrote in the undated filing from Overstock’s investor site.
Overstock’s May 19 dividend issuance will be more a theoretical demonstration than technological vindication, however. As described in the Tuesday filing, OSTKO is a “digitally enhanced security,” not a full digital asset.
That’s because OSTKO’s on-chain representation is a legally irrelevant “courtesy carbon copy” of the security’s real ownership records held on transfer agent Computershare’s “conventional records,” which update before the distributed ledger does.
Johnson told CoinDesk on Tuesday the technological concession helps the asset “fit within regulatory parameters” (OSTKO is being registered with the SEC). It’s essentially a bridge.
“The goal is that as regulators and market participants become increasingly comfortable with DLT/blockchain technology, it will gradually play a larger role in the overall process to the benefit of investors, regulators and other market participants,” he said.
DISCLOSURE
Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2024, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.