Basis, a cryptocurrency project that in April announced it had raised US$133 million from a slew of high profile investors, has announced that it is shutting down and returning the funds to its backers because of regulatory concerns.
The project, which was being developed by U.S.-based company Intangible Labs, had aimed to create a new type of cryptocurrency known as a "stablecoin" that could maintain a stable price and be more usable than existing digital coins whose value in dollars is highly volatile.
"Unfortunately, having to apply U.S. securities regulation to the system had a serious negative impact on our ability to launch Basis," Nader Al-Naji, chief executive of Intangible Labs, said in a blog post on Thursday. "As such, I am sad to share the news that we have decided to return capital to our investors. This also means, unfortunately, that the Basis project will be shutting down."
The project's investors included Google's venture arm GV, Silicon Valley venture capital firm Andreessen Horowitz, Bain Capital Ventures, billionaire hedge fund manager Stan Druckenmiller and former Federal Reserve Governor Kevin Warsh.
The U.S. Securities and Exchange Commission (SEC) has been warning since July 2017 that cryptocurrencies may be securities, which would make them subject to the federal securities laws.
While the SEC has not issued specific determinations on which cryptocurrencies it regards as securities, the warnings have made issuers more cautious.
"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," Al-Naji said.
News that the project was shutting down and returning funds to investors was first reported by cryptocurrency news site The Block.
(Reporting by Anna Irrera; Editing by David Gregorio)