Stablecoin Project Basis Shuts Down After Apprehensions of Being Considered as Securities

Stablecoin Project Basis Shuts Down After Apprehensions of Being Considered as Securities

Basis confirms the news saying that US SEC regulations would designate the stablecoin as securities and their ‘bond’ and ‘share’ tokens as unregistered securities which would consequently reduce the likelihood of potential buyers buying the tokens; will return funds to investors

Intangible Labs is the owner of Basis. In April this year, the stablecoin project secured $133 million from leading venture capital firms such as Andreessen Horowitz and Bain Capital Ventures.

At its core the decentralized nature of most cryptos is fundamentally incompatible with them being securities.

Nader Al-Naji, CEO of Basis

The Basis for Closing

Through a Medium blog post, Nader Al-Naji, CEO of Basis, wrote their lawyers came to the conclusion that it is not possible to prevent the securities classification for their coin.

Basis planned to use three tokens for their ecosystem: the Basis stablecoin, and bond and share tokens as secondary tokes to be used to preserve its stability and to achieve its goal to become an algorithmic central bank.

Bond tokens act similar to the typical bond. It will be auctioned if the supply needs to be restricted promising token owners one Basis in the future. Share tokens were supposed to be used for dividends by the time the coins are in demand.

If Basis is classified as securities these secondary tokens will be treated as unregistered securities. And by the nature of unregistered securities, Intangible Labs will be required to scrutinize the eligibility of overseas users and the company can only confine token ownership to accredited US investors for a year after its circulation.

The transfer restriction would result in the Basis system forfeiting censorship resistance. It would also mean fewer participants and less liquidity for on-chain auctions.

Stablecoins in Recent News

Circle’s USD Coin (USDC) is now supported by 50 cryptocurrency companies.

Cointelegraph reports that MakerDAO’s Maker (MKR) stablecoin climbs 32% in 24 hours. And Paxos Standard (PAX) has a total transaction volume of $5 billion in three months.

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