The stablecoin’s project team said the US Securities Regulation does not quite rhyme with their technology Roadmap.
Basis To Shut Stablecoin Project
The New Jersy Based cryptocurrency startup company Basis is slated to shut down its highly anticipated stablecoin project. The company was developing a stablecoin whose elastic supply would ostensibly expand and contract to maintain values tied to a dollar. The company said it would develop a new token that would be speculation free offering maximum utility,
Following the announcement of the project, numerous investors liked the concept and intern got interested in the project. Additionally, eight months ago the company raised over $133 million from numerous investors. Also, the companies who devoted their money to develop the project includes,
- Bain Capital Ventures,
- Longtime hedge fund manager Stan Druckenmiller,
- One-time Federal Reserve governor Kevin Warsh,
- Lightspeed Venture Partners,
- Foundation Capital,
- Andreessen Horowitz,
- NFX Ventures,
- Valor Capital,
- Sky9 Capital,
- Digital Currency Group, etc.
Today, Basis CEO and co-founder Al-Naji revealed that the project is shutting down and Basis is returning money back to investors. Moreover, the CEO explained that its technology roadmap and the U.S SEC regulations did not rhyme. The CEO specifically revealed that the company didn’t foresee some of the effects of the US regulatory guidelines.
Why Basis Close Down?
He revealed that his company realized that there is no way to avoid securities status for bond and share tokens. Also, he continues saying since the company offers unregistered securities, bond, and share tokens would be subject to transfer restrictions with Basis. He said Basis would need to limit token ownership to accredited investors in the U.S for the first year after launching. The company would also need to carry out eligibility checks for all of their foreign customers.
Al Naji said the major problem that enforcing transfer restriction gives to its company in violation of its censorship resistance. He further explained that on-chain auctions at the platform would subsequently attract fewer users. According to Al Naji would affect the stability of the stablecoin.
SEC Seems Relaxing Crypto Regulations
Regulation constraints alone cannot render a company that just raised more than $133 million to shut down business before launching. Moreover, it is not yet clear the actual motive behind the shutting down of Basis stablecoin. Some reports indicate that the company could not realize their methods is not viable.
It is unclear if investors could drag Basis to any sort of legal battle for abandoning the project after raising funds. However, Basis promised to reimburse all investors their respective share of the investment capital. Furthermore, some investors would argue that their money should gain some interest given the period of time Basis held the funds.
We are yet to hear of any of such claims but in the meantime, we are optimistic that every investor would get their money back. Share your comments about this topic in the comment section below and do not forget to follow this story on Twitter.