Confirmed: Basis CEO Says Project Will Shut Down due to Regulatory Concerns

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The United States-based stablecoin project Basis has officially
confirmed that it will close operations and refund investors in
comments to Bloomberg today, Dec. 13.
According to Basis’ CEO Nader Al-Naji, the decision to close the
project was made due to regulatory concerns over a type of token
in Basis’ — as well as other algorithmic stablecoins’ — system
known as a “secondary token,” which helps keep the coin’s price
stable.

Following reports on the project’s closure yesterday, Dec. 12, Al-
Naji now confirmed that there would be no way to “escape security
classification” for the secondary token, calling the news a “very
negative finding” for the company.

As Cointelegraph reported yesterday, and Al-Naji confirmed today,
the company’s lawyers concluded that Basis’ secondary tokens, or
“bond” tokens, would be considered securities by regulators,
namely the U.S. Securities and Exchange Commission ( SEC ). The
classification would arguably decrease the number of potential
buyers for said tokens, and thereby disrupt Basis’ stablecoin
model.

Al-Naji stated that the current regulatory approach to tokens that
classifies many of them as securities is “onerous for anyone trying
to build a decentralized network.” The CEO stated:
“At its core the decentralized nature of most cryptos is
fundamentally incompatible with them being securities.”
Basis raised $133 million in funding from high-profile investors,
including Andreessen Horowitz and Bain Capital Ventures, back in
April 2018.

Launched in 2017, the crypto startup tweeted today to thank its
supporters and investors:
“We owe our sincere thanks to everyone who supported us
in our mission to create a better monetary system. Until
next time.”

The stablecoin market has seen an immense wave of adoption this
year, with November alone reportedly showing a massive 1,032
growth in on-chain transactions compared to September.
According to Bloomberg, the crypto industry has seen 120
developing stablecoin projects over the year, with some of them,
similarly to Basis, implementing secondary tokens. These include
firms such as MakerDAO and Reserve, that latter’s co-founder and
CEO Nevin Freeman confirming that both projects “don’t need to
use security tokens to buy up stablecoins,” in comments to
Cointelegraph.

Earlier today, Cointelegraph reported that MakerDAO’s governance
token Maker (MKR) has surged by more than 32 percent over the
past 24 hours to press time, pushing the coin into the ranks of
CoinMarketCap’s top 20 coins .
Also today, Cointelegraph reported that U.S. dollar-pegged
stablecoin Paxos Standard (PAX) has exceeded $5 billion worth of
transaction volumes over the first three months after its launch in
September.

Source: https://cointelegraph.com/