The Salt Lake City-based online retailer Overstock is working on a revolutionary new development: a new independent stock exchange powered by Bitcoin technology. The new stock exchange could sidestep traditional stock exchanges such as NYSE and NASDAQ and issue corporate stock directly over the Internet.

Overstock, one of the first and largest online retailers to accept bitcoin payments, first announced the project in October 2014.

“There is an opportunity to recreate the financial world as we know it in the parallel universe that is the blockchain,” Overstock’s CEO Patrick Byrne told Wired. “We are writing rules for this whole new universe. “ In a recent Coin Telegraph interview, Byrne said that Overstock is building the platform that will let companies issue a crypto-equity, which is a new frontier with many legal obstacles.

On Friday, Overstock got one step closer to implementation. In a prospectus filed with the Securities and Exchange Commission (SEC), Overstock indicated that it may issue up to $500 million in stock or other securities using the blockchain technology that powers Bitcoin.

“We may decide to offer securities as digital securities, meaning the securities will be uncertificated securities, the ownership and transfer of which are recorded on a cryptographically-secured distributed ledger system using technology similar to (or the same as) the distributed ledger technology used for trading digital currencies,” reads the prospectus. “Digital securities are designed to enable trades to settle immediately or nearly immediately, unlike traditional securities, [and] enable the securities holder to hold its securities directly or through its broker-dealer, outside the system for traditional securities.”

“The prospect of using a blockchain-like public ledger to hold securities or other assets is quite exciting and one that should be explored,” Georgetown University professor of finance James Angel told Wired.

The hypothetical language used in the filing shows that it is but the first official interaction with the SEC, which may take some time to digest and give a green light to this novel and potentially disruptive approach to securities.

The filing is a “shelf registration” meant to introduce future offerings to regulators and investors gradually, with more detailed information expected to come later. However, Overstock’s CEO Patrick Byrne is confident: “I wouldn’t have taken all the time and trouble and expense to do this if I didn’t plan on using it someday soon,” he told Wired.

Angel thinks the SEC will approve the filing eventually, but investors will be initially cautious.

The Overstock digital securities would not be listed for trading on existing stock exchanges, but traded exclusively on a specific trading system to be registered with the SEC as an Alternative Trading System (ATS). The prospectus emphasizes that the ATS will operate with the speed and irrevocability appropriate to the immediate or nearly immediate settlement of digital securities, but warns that “the payment mechanics of the ATS are novel and untested.”

The distributed ledger used to record transfers of ownership of digital securities, represented by ledger balances and secured by cryptographic key pairs, will be available to the public and store the complete trading histories.

The ATS won’t use a Bitcoin wallet approach where the cryptographic keys are controlled by the user – at least not initially – but a centralized key management scheme similar to that used by “Bitcoin banks” such as Circle. Initially, either the ATS itself or each broker-dealer participating on that ATS would hold the private keys on behalf of securities holders.

This centralized or semi-centralized model, which may appear as a step back from the decentralized blockchain, is justified because it will enable securities holders to manage their digital securities account with a simple login and password, similar to traditional online brokerage accounts.

The use of the word “initially,” however, indicates that Overstock may implement a more decentralized model in a second phase. Customer protection against dishonest brokers will be provided by multisig: “There can be multiple private keys, any number of which may be required in order to authorize a transfer of ownership of the digital securities,” notes the filing.