The End of Basis: A Regulatory Tale
In a surprising twist of fate, Basis, a prominent stablecoin project based in the United States, has announced its decision to cease operations, much to the dismay of its investors. The company confirmed the news through comments made by CEO Nader Al-Naji to Bloomberg on December 13. This move comes amidst troubling regulatory concerns surrounding its secondary tokens, a crucial component of Basis’s model that was meant to stabilize the coin’s price.
Regulatory Roadblocks
Al-Naji described the regulatory findings regarding the secondary token as a “very negative finding.” The legal team concluded that these tokens, also known as “bond” tokens, would fall under the classification of securities according to the U.S. Securities and Exchange Commission (SEC). This classification brings with it a host of restrictions and limitations, significantly diminishing the appeal to potential investors and jeopardizing Basis’s entire stablecoin framework.
A Distressed Market
The current environment for cryptocurrencies is like trying to win a game of chess while the rules keep changing mid-play. The burden of onerous regulations makes it particularly challenging for innovative projects to thrive. Al-Naji bluntly stated, “At its core, the decentralized nature of most cryptos is fundamentally incompatible with them being securities.” It’s like trying to make a square peg fit into a round hole—frustrating for everyone involved!
Funding and Support
Despite their closure, Basis had previously raised an impressive $133 million from heavyweight investors, including the likes of Andreessen Horowitz and Bain Capital Ventures back in April 2018. Today, the company took to Twitter to express gratitude to its supporters: “We owe our sincere thanks to everyone who supported us in our mission to create a better monetary system. Until next time.” It’s a bittersweet farewell for a project that aimed to revolutionize monetary systems.
The Expanding Stablecoin Landscape
Interestingly, Basis’s closure comes in the context of a booming stablecoin market. November saw a jaw-dropping 1,032% increase in on-chain transactions compared to September. Bloomberg highlights that there are currently around 120 developing stablecoin projects, some, like MakerDAO and Reserve, are also navigating through similar waters of secondary tokens without the need for securities. As crypto continues to evolve, it remains to be seen how companies will adapt to shifty regulatory sands.
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