The well-known stablecoin project Basis is shutting down operations and returning what is left of the funds they raised to investors.
According to a recent report by The Block, which cites multiple people with direct knowledge of the situation, Basis ran into regulatory headwinds that hindered it from launching its algorithmic stablecoin.
Nevin Freeman, the CEO, and Co-Founder of another stablecoin project called Reserve has commented on Basis’s shutdown saying that the move could be a result of the regulatory concerns that have surrounded one of the token types issued By Basis.
According to Freeman, the protocol of Basis deploys a secondary token called the ‘bond token.’ This token is required to be purchased to keep the stable peg in place. Freeman elaborated on the matter saying that such secondary tokens are considered securities under the regulatory framework laid out by the SEC.
Basis was going to be a stable coin that operated with three coins, a stable coin called base coin, "base bonds" and "base shares" would underlie the algorithmic protocol of the stable coin assisting in keeping the price stable.
However, the plan in hindsight was a great idea however, the algorithmic model proved too difficult to implement with the U.S regulatory framework.
Basis raised $133 million in funding and have not specified how much, if all of the funds, will be returned. It seems likely all investors will be refunded.