The CFTC has approved tZERO to operate a regulated derivatives exchange, adding to an October clearinghouse registration. The approvals satisfy the first earn-out milestone in tZERO's proposed $350 million merger with FG Imperii, but the deal has not closed and the company has not named its first contracts.
The U.S. Commodity Futures Trading Commission registered tZERO DCM, LLC as a designated contract market effective November 10. The registration lets the tokenized-securities infrastructure provider operate a regulated derivatives exchange.
tZERO's November 11 announcement said the approvals give it the regulatory foundation to develop derivatives trading and clearing services for financial institutions through its own subsidiaries. Chief Executive Officer Alan Konevsky said, "Securing both exchange and clearinghouse approvals is a major achievement for tZERO," according to crypto.news.
Clearinghouse registration came first
The exchange approval follows the October 16 registration of tZERO DCO, LLC as a derivatives clearing organization. According to the CFTC record, that registration permits tZERO DCO to clear fully collateralized futures, options on futures and swaps.
Last month, tZERO identified event contracts, conventional derivatives, tokenized derivatives, perpetual futures and other cryptocurrency products as potential offerings. However, tZERO has not announced which contracts will trade first or when the exchange will begin serving customers.
What the approval means for the SPAC deal
Under the October 31 merger agreement, CFTC approval of both applications satisfies the first earn-out target, which covers 1.25 million shares. Because the target was met before closing, those shares are to be issued directly to the designated recipients at closing rather than placed in escrow.
The companies announced the agreement on November 2, valuing tZERO at $350 million before the transaction, including up to $25 million linked to milestones. The valuation is not $350 million in cash proceeds, The Defiant notes.
Both sides expect to close in early 2027. Closing conditions include shareholder approvals, regulatory consents and filings, an effective Form S-4 registration statement and approval to list the combined company's stock on NYSE American.
Alongside the new permissions, tZERO keeps its existing business in tokenization, which already includes brokerage, alternative trading systems and custody for digital asset securities.
Sources: crypto.news, The Defiant
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