Neonexchange vs tZero : Regulatory restrictions regarding Security Token Offering (STO)

Hello community, @ethan , @canesin !

I read the FAQs of tZERO which finalized its STO on August 2018. tZero is a majority owned subsidiary of, and competitor which is massively mentioned in the news.

The FAQs is available there :

Some points focused my attention :

  1. Locking system

Q: When will I be able to move the tokens from my individual tZERO wallet address to my personal wallet?**
A: To ensure compliance with federal securities law and regulations, and in accordance with the terms of the tokens themselves, your tokens will be locked in tZERO’s wallet for 90 days from issuance. […]

=> Why Neonexchange differs from this locking system required by the securities law ?

  1. NEX token trading

Q: Will I be able to trade the tZERO tokens on other exchanges (Bitfinex, Coinbase, Kraken, etc.)?
A: No. For a variety of legal and regulatory reasons, we are required to carefully monitor who holds tokens at any given time. […]

=> Why Neonexchange differs from this restriction required by the securities law?

  1. OTC trading

Q: Will OTC/ peer to peer transactions be possible?
A: No. For a variety of legal and regulatory reasons, we are required to carefully monitor who holds tokens at any given time. […]

=> Since it is prohibited by the securities law, why it is currently possible to trade the NEX token via OTC trading ?

Thank you for the clarifications :slight_smile:


Great questions. Nicely laid out for clear understanding. Looking forward to seeing the teams answers.


tZERO is not a registered security, it was created and issued in U.S. in a private placement exempt from the registration requirements under U.S. security laws. As you can see on their FAQ that you copy here. As you can also see on the FAQ most of this restrictions is to respect the exemption requirements.

NEX is a registered security under a complete different jurisdiction.


Wow thank you ! I understand, so tZero holders cannot resell their tokens to non-accredited investors, while NEX holders can do !

1 Like

@fabibi, I think NEX is ahead of tZERO in the sense that they aspire to achieve what NEX has already achieved:

In the future, we may register the securities under U.S. securities laws to enable secondary trading in more robust trading environments, such as the domestic (USA) exchange we are building in partnership with BOX Digital Markets, and international securities exchanges as well (with whom such discussions are underway), and non-accredited investors would be eligible to purchase tokens on these exchanges. These initiatives are an ongoing process and we will inform you of updates as they happen.

Quoting from their FAQs, you can see that while NEX can already be purchased by non-accredited persons, tZERO aspires to achieve this in the future. Also, as Fabio points out, NEX is already a security.

I think what is left for NEX is to get the appropriate licenses to allow trading in the USA and by citizens of USA.


This is very interesting and scary… read this link below from SEC