The cryptocurrency market is going through a rough phase at the moment and has now led to Basis, one of the widely recognized projects to create an alternative to traditional currency, to be tossed into the recycle bin by the Securities and Exchange Commission [SEC].
Basis had raised $133 million from giants like Google, Andreessen Horowitz and Bain Capital this April, according to Forbes. This was to make a stablecoin that would be safe from inflation and to try and prevent the vast changes in price that impact other cryptocurrencies. This had made Basis the top funded crypto startup.
However, Basis realized that their project would be able to function only if their tokens, or what they created to adjust the supply of its stablecoin to keep it really stable, would not be subjected to the US securities law. The regulators were trying to understand the laws to be applied to the projects, while Basis predicted the shut down of the project. Nader Al-Naji, CEO of Intangible labs, the company behind the project, said to Recode:
“Unfortunately, having to apply US securities regulation to the system had a serious negative impact on our ability to launch Basis.”
The CEO also elucidated on what went wrong and how other similar companies can avoid this in the future.
“We met with the SEC to clarify a lot of our thinking. The SEC generally avoids saying that something will definitely be one way or the other. But from that meeting, we got the impression that we would not be able to avoid the securities classification.”
Al Naji added that the Basis technology was almost complete and that the company was just waiting for a go-ahead from the regulators. Now, that the regulatory climate is against the company, and it will be returning the venture capital to investors. The CEO also expressed his disappointment and said that if the “regulatory climate loosened rather than tightened, it would have been amazing for our technology, and also for the people who use it”.
However, many people looked at the progress of the project as a revolution that was going to hit the cryptocurrency world, even as the project will never see the light of day.
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