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The cryptocurrency industry has had a wild year, from peak to downstream. Case in point: the news today that Basis – one of Silicon Valley's darkest attempts to create an alternative to traditional currency – is closing.
Basis said he had raised $ 133 million in April alone from venture capitalists like Andreessen Horowitz and Alphabet & # 39; s GV. That shocking amount of pasta was meant to build a "stablecoin" – or a currency that would have been isolated from inflation – and to try to prevent price sensitivity that has plagued other cryptocurrencies.
But Basis believes that the project will only really work if its tokens, or that Base has created to fix the supply of its stablecoin and thus maintain its relatively stable value, would not be subject to US securities laws. The regulators tried to assess whether to apply standard laws that govern things like stocks to digital goods like coins – and Basis said he was reading tea leaves and expecting a crackdown.
"Unfortunately, having to apply US regulation to the system has had a serious negative impact on our ability to launch Basis," his CEO Nader Al-Naji wrote on Thursday.
But at a larger image level, this is a black eye for the entire cryptocurrency industry. Given that the amount of money raised makes it clear, Basis has been seen as the vanguard of the cryptocurrency revolution. And while the company says it is returning the money it has raised to its investors, it is still a very public stumbling block for its prestigious supporters.
Of course, investments in cryptography – just like initial investments – produce many failures. It's normal. But this particular failure is also a way to remember why some Silicon Valley investors have avoided investing in encryption projects like the first coin offerings in the first place: the regulatory landscape is too uncertain to be able to predict much of everything.
The death of Basis was reported for the first time by The Block.
