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

Published at: Dec. 13, 2018

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.

Tags
Adoption
Blockchain
United States
Sec
Bitcoin Regulation
Cryptocurrencies
Government
Tokens
Law
Stablecoin
Related Posts
Crypto Bahamas: Regulations enter critical stage as gov't shows interest
The crypto community and Wall Street converged last week in Nassau, Bahamas, to discuss the future of digital assets during SALT’s Crypto Bahamas conference. The SkyBridge Alternatives Conference (SALT) was also co-hosted this year by FTX, Sam Bankman-Fried’s cryptocurrency exchange. Anthony Scaramucci, founder of the hedge fund SkyBridge Capital, kicked off Crypto Bahamas with a press conference explaining that the goal behind the event was to merge the traditional financial world with the crypto community: “Crypto Bahamas combines the crypto native FTX audience with the SkyBridge asset management firm audience. We are bringing these two worlds together to create a …
Adoption / May 3, 2022
Elusive Bitcoin ETF: Hester Peirce criticizes lack of legal clarity for crypto
The crypto sector may be maturing, but regulatory clarity around the treatment of digital assets continues to remain cumbersome. This was recently highlighted by Commissioner Hester Peirce — also known as the United States Securities and Exchange Commission’s (SEC) “crypto mom” — in remarks she made at “The Regulatory Transparency Project Conference on Regulating the New Crypto Ecosystem: Necessary Regulation or Crippling Future Innovation?” Peirce began her speech by emphasizing the importance of “regulating the new crypto ecosystem.” While this may be, Peirce also noted that the crypto industry is still in search of an actual regulator. She said: “A …
Decentralization / June 17, 2022
US Congress Schedules Sept. 24 Hearing With SEC — Crypto on the Agenda
The United States House of Representatives Committee on Financial Services has scheduled a hearing with Securities and Exchange Commission (SEC) Chairman Jay Clayton and four other SEC commissioners to discuss, among other topics, crypto. In a memorandum from Sept. 19, the Committee on Financial Services stated that it will hold a hearing on Sept. 24 entitled “Oversight of the Securities and Exchange Commission: Wall Street’s Cop on the Beat.” Present alongside Clayton will be Commissioner Hester Peirce (also known as Crypto Mom) and another three officials. Libra coin could amount to a security The Committee on Financial Services has included …
United States / Sept. 20, 2019
U.S. Congressman calls for ‘Broad, bipartisan consensus’ on important issues of digital asset policy
In a letter to the leadership of the United States House Financial Services Committee, ranking member Patrick McHenry took a jab at “inconsistent treatment and jurisdictional uncertainty” inherent in U.S. crypto regulation and called for the Committee to take on its critical issues. McHenry, a Republican representing North Carolina, opened by mentioning that the Committee’s Democrat Chairwoman Maxine Waters is looking to schedule additional hearings addressing matters pertinent to the digital asset industry. He further stressed the need for identifying and prioritizing the key issues and achieving a “broad, bipartisan consensus” on the matters affecting the industry that holds immense …
Regulation / Jan. 25, 2022
CBDC activity heats up, but few projects move beyond pilot stage
Government-issued electronic currency seems to be an idea whose time has come. “More than half of the world’s central banks are now developing digital currencies or running concrete experiments on them,” reported the Bank for International Settlements, or BIS, in early May — something that would have been unthinkable only a few years ago. The BIS also found that nine out of ten central banks were exploring central bank digital currencies, or CBDCs, in some form or other, according to its survey of 81 central banks conducted last autumn but just published. Many were taken aback by the progress. “It …
Adoption / May 16, 2022