$133 Million Basis Stablecoin Project Ceases and Desists Citing Regulatory Concerns

$133 Million Basis Stablecoin Project Ceases and Desists Citing Regulatory Concerns

The Basis stablecoin project, which attracted $133 million of venture capital in Apri has confirmed in the last few hours that it will be closing down all operations, citing US securities regulation as the reason for its decision.

Basis’ CEO Nader Al-Naji recognised they had launched the venture on the risk of hoping for “a favourable regulatory landscape” which has not transpired.

Complex Model

Intended to be a competitor to the likes of MakerDAO and Circle, Basis was designed to be a low-volatility cryptocurrency but one which featured a complex model involving three tokens – the stablecoin itself, a bond token which could be auctioned off whenever there was a need to contract supply, and a share token offering dividends over time.

The project team had raised $133 from investors in its bid to create a monetary system that sought to be “resistant to hyperinflation, free from centralized control, and more stable and robust than monetary systems that came before it.”

Speaking to Bloomberg, Basis CEO Nader Al-Naji stated that the bond and share token elements of the project would likely been considered securities by regulators – in what appears to have been a conclusion reached after after extensive legal consultation – limiting legal possession of the tokens to accredited investors only.

The Basis CEO also explained that “the current way in which regulators are viewing how securities regulation applies to tokens is generally onerous for anyone trying to build a decentralised network.” 

According to the statement on the company website, all investors – which includes a string of high profile venture capital firms such as Andreessen Horowitz, Stanley Druckenmiller and Bain Capital Ventures – will have their capital returned to them.

The creation of a successful, reliable and transparent stablecoin is seen in some quarters as the Holy Grail of crypto, representing the possible foundation for more generalised adoption of crypto and crypto-based technologies which have been hampered by the inherent risks associated with the volatility of Bitcoin and Ethereum.