Basis Stablecoin Confirms Shutdown, Blaming 'Regulatory Constraints'

Basis, the most well-funded stablecoin startup, has confirmed that it is shutting down and returning all of its remaining funds to investors.

The company realized that the regulatory landscape was too unfavorable to launch the project, according to an interview published today in Forbes.

The startup's move to return funds to investors was first reported by crypto news site The Block.

Originally called Basecoin, Basis had secured $133 million in funding to build an algorithmic stablecoin.

Its founder, Nader Al-Naji, frequently described the project using code to maintain price stability for its token in the same way the U.S. Federal Reserve does for the dollar.

"As regulatory guidance started to trickle out over time, our lawyers came to a consensus that there would be no way to avoid securities status for bond and share tokens."

"We considered many alternative paths to launch to try and comply with the regulatory constraints while keeping our product compelling and competitive, including launching offshore, and starting off with a centralized stability mechanism," Al-Naji explained in the post.

"At a high level, their bond tokens had to be classified as securities, which meant they'd need to restrict transfers and do accredited investor checks using a centralized whitelisting system. That was totally at odds with the concept of a decentralized independent stablecoin."

In a report on the stablecoin industry released in September, Blockchain noted that the company had by far the most open positions listed of any of the leading stablecoin projects, showing 22 in that report.

Hiring plans at Basis were fueled by its generous funding.