U.S Stablecoin, Basis to Shut Down, Return funds to Investors

in #basis5 years ago


According to reports by crypto news outlet, The Block, Basis,a United States Based stablecoin project has concluded plans to shut down its operations and return the majority of its funds to investors who had earlier invested in the project.

Quoting “multiple people with direct knowledge of the situation,” the report noted that Basis is set to return most of the $133million the company raised in private funding in April. Part of the company's investors includes big names like Bain Capital Ventures and Andreessen Horowitz.

The report also suggests that while Basis has already concluded plans to shut down operations, it plans to make its decision public by Wednesday.

Per the announcement, many believe that the company’s decision may be due to regulatory concerns regarding one of Basis token types. Speaking on the regulatory concerns, Nevin Freeman, CEO and co-founder of Basis stated that as with other algorithmic stablecoins, Basis protocol implements a secondary token which the company refers to as “Bond” token and for the primary token to maintain its peg price, the Basis bond token has to be purchased.

“In many cases, these secondary ‘share’ or ‘bond’ tokens are securities [under U.S. law],” Freeman added. This implies that the decision by basis to shut down operations is connected with a lack of approval from the U.S.Securities and Exchange Commission (SEC).

According to him, “Since there is only a small set of people who can [legally] buy these ‘share’ or ‘bond’ [unregistered] security tokens,protocols based on this mechanism may be at risk — if nobody wants to buy these tokens when the stablecoin is trading below the pegged price, the peg will just stay broken.”

It would be recalled that Basis received backing from leading industry firms including Peter Thiel, Coinbase and Distributed Global. Elsewhere, many stablecoin projects have become quite popular this year. As a matter of fact,Houbi and OKEx exchanges in October announced support for major fiat backed stablecoins like USD Coin (USDC), True USD(TUSD) Paxos (PAX) and Gemini dollar (GUSD).



Posted from my blog with SteemPress : https://www.digitalcoinnews.com/u-s-stablecoin-basis-to-shut-down-return-funds-to-investors/

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