Home News BASIS Stablecoin Project Confirms Shutdown, Blames Stiff Regulatory Conditions

BASIS Stablecoin Project Confirms Shutdown, Blames Stiff Regulatory Conditions

Basis Stablecoin project was the most well-funded project with backing from top VCs including GV, Bain Capital etc.

December 14, 2018 13:37
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Another hard day for the crypto ecosystem as Basis stablecoin has confirmed its shut down and will return all the remaining funds to investors. The company has blamed the unfavourable regulatory conditions which made it hard to launch the project. In a blog post on Dec 13th, CEO and co-founder of Basis, Al-Naji wrote:

“As regulatory guidance started to trickle out over time, our lawyers came to a consensus that there would be no way to avoid securities status for bond and share tokens (though Basis would likely be free of this characterization).”

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“Unfortunately, having to apply US securities regulation to the system had a serious negative impact on our ability to launch Basis,”

Originally called Basecoin, it was one of the most well-funded crypto projects which had secured $133 million in funding to develop the algorithmic stablecoin. The project would have used specific algorithms and codes to maintain the price stability in the similar way the Fed does for the USD

Al-Naji further explained in the post:

“We considered many alternative paths to launch to try and comply with the regulatory constraints while keeping our product compelling and competitive, including launching offshore and starting off with a centralized stability mechanism.”

“Ultimately, however, we don’t think any of the paths we considered are compelling enough for our users or our investors, or consistent enough with our vision to justify moving forward.”

He ends the post by writing: “Until next time”:

“You gave us the opportunity to change the world, and we’re looking forward to trying again.”

The project was backed by some of the big names of the VC world including GV, Bain Capital Ventures, Lightspeed Venture Partner, Andreessen Horowitz, Sky Capital.

Salil Deshpande of Bain Capital Ventures told CoinDesk explaining the situation:

“At a high level, their bond tokens had to be classified as securities, which meant they’d need to restrict transfers and do accredited investor checks using a centralized whitelisting system. That was totally at odds with the concept of a decentralized independent stablecoin.”

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