Basis’ CEO has confirmed the stablecoin is shutting down due to regulatory concerns over its “secondary token” implementation.
According to Basis’ CEO Nader Al-Naji, the decision to close the project was made due to regulatory concerns over a type of token in Basis’ — as well as other algorithmic stablecoins’ — system known as a “secondary token,” which helps keep the coin’s price stable.
Following reports on the project’s closure yesterday, Dec. 12, Al-Naji now confirmed that there would be no way to “escape security classification” for the secondary token, calling the news a “very negative finding” for the company.
As Cointelegraph reported yesterday, and Al-Naji confirmed today, the company’s lawyers concluded that Basis’ secondary tokens, or “bond” tokens, would be considered securities by regulators, namely the U.S. Securities and Exchange Commission (SEC). The classification would arguably decrease the number of potential buyers for said tokens, and thereby disrupt Basis’ stablecoin model.
Al-Naji stated that the current regulatory approach to tokens that classifies many of them as securities is “onerous for anyone trying to build a decentralized network.” The CEO stated:
“At its core the decentralized nature of most cryptos is fundamentally incompatible with them being securities.”
Launched in 2017, the crypto startup tweeted today to thank its supporters and investors:
“We owe our sincere thanks to everyone who supported us in our mission to create a better monetary system. Until next time.”
The stablecoin market has seen an immense wave of adoption this year, with November alone reportedly showing a massive 1,032 growth in on-chain transactions compared to September. According to Bloomberg, the crypto industry has seen 120 developing stablecoin projects over the year, with some of them, similarly to Basis, implementing secondary tokens. These include firms such as MakerDAO and Reserve, that latter’s co-founder and CEO Nevin Freeman confirming that both projects “don’t need to use security tokens to buy up stablecoins,” in comments to Cointelegraph.
Earlier today, Cointelegraph reported that MakerDAO’s governance token Maker (MKR) has surged by more than 32 percent over the past 24 hours to press time, pushing the coin into the ranks of CoinMarketCap’s top 20 coins.
Also today, Cointelegraph reported that U.S. dollar-pegged stablecoin Paxos Standard (PAX) has exceeded $5 billion worth of transaction volumes over the first three months after its launch in September.