The tZERO branch of Overstock.com was hired by the private equity firm GSR Capital to develop a cobalt trading token.
The commitment could lead to the tokenisation of up to $ 200 million worth of this rare metal, used to manufacture batteries for electric vehicles, only in 2019, Overstock said Monday.
However, it also delayed the closing of the separate agreement, previously announced by Hong Kong GSR, to invest up to $ 404 million in Overstock and tZERO.
The transaction was scheduled for December 15, but the day before "GSR contacted us and asked for an extension to allow a key partner in the cobalt initiative outside of China to participate in the & # 39; operation ", CEO of M. Overstock Patrick M. Byrne wrote in a letter to shareholders on Monday.
Byrne was contracted by the delay, telling investors:
"Even if the partner in question is well known to us and will be a valuable part of our ecosystem, it was frustrating for us, as it is likely for you, that the delay came at the eleventh hour".
Nonetheless, he was optimistic about the opportunity to fine-tune cobalt trade, calling it "one of the most exciting blockchain initiatives today".
Ecosystem in Asia
According to tZERO and GSR, the token will comply with regulatory requirements and will simplify the identification, purchase and monitoring of cobalt supply. tZERO will provide its expertise to "build an ecosystem in Asia for tokenised commodity purchase contracts," Overstock said in a separate press release.
"Intelligent automation of contracts in these transactions will significantly reduce overall costs and at the same time improve the transparency of rare earth metals purchases through the supply chain process," Byrne said in the statement.
In the long term, Overstock and GSR have said that their collaboration could lead to the development of a security token trading platform like tZERO in Hong Kong. "GSR and our partner will do much more than just cobalt tokenization and we will see further growth in our partnership with tZERO, including the completion of an investment directly within the next quarter," the president said in a press release and founder of GSR Capital, Sonny Wu.
Cobalt trade has been a controversial topic in recent years, since while minerals fuel innovative industries such as the production of electric cars, over half of world supplies come from the Democratic Republic of the Congo, famous for the use of child labor in cobalt mines. China has been extraordinarily active in buying cobalt producers and has taken on many responsibilities for funding unsafe ways of production.
The blockchain was seen by some as a possible cure for this: in April, the British consulting firm RCS Global launched a blockchain-based pilot project to detect possible illegal activities in the mines and record them on the blockchain.
Overstock plans to sell its flagship e-commerce business in February to raise money for Doctors Ventures, the umbrella for tZERO and other company blockchain investments. tZERO should be launched at the start of next year, with its token as the primary trading asset.
Cobalt magician via Shutterstock.