One of crypto’s most futuristic-sounding projects just came crashing down
The team behind Basis, which had called itself a “a cryptocurrency with an algorithmic central bank,” has announced that it is shutting down the project and returning the capital it raised to investors.
“Stable” but complex: So-called stablecoins are coins designed to keep a stable price and avoid the volatility that characterizes most cryptocurrencies. Some simply keep reserves of real dollars to back up the cryptocurrency. But Basis said it had devised a new kind of token that would keep its peg thanks to an elaborate system of incentives that would drive the buying and selling of two additional tokens, called “bond” and “share” tokens. Those separate markets would serve to adjust the Basis supply and keep it stable. The concept raised $133 million from a number of big VC firms, including Andreessen Horowitz.
Decentralization, meet regulation: “Unfortunately, having to apply US securities regulation to the system had a serious negative impact on our ability to launch Basis,” the company founders said yesterday. Their lawyers had concluded that bond and share tokens would not be able to avoid securities status, they wrote, adding that this would have required that the team keep a “centralized whitelist” of eligible traders and limited the pool of auction participants, which would have made Basis less stable.
Don’t blame crypto winter: This isn’t about the bear market for cryptocurrency. It has never been clear that Basis and other technically complex stablecoin projects would actually work. Basis’s situation shows how this is a legal question as well as a technical one.
Keep Reading
Most Popular
Large language models can do jaw-dropping things. But nobody knows exactly why.
And that's a problem. Figuring it out is one of the biggest scientific puzzles of our time and a crucial step towards controlling more powerful future models.
The problem with plug-in hybrids? Their drivers.
Plug-in hybrids are often sold as a transition to EVs, but new data from Europe shows we’re still underestimating the emissions they produce.
How scientists traced a mysterious covid case back to six toilets
When wastewater surveillance turns into a hunt for a single infected individual, the ethics get tricky.
Google DeepMind’s new generative model makes Super Mario–like games from scratch
Genie learns how to control games by watching hours and hours of video. It could help train next-gen robots too.
Stay connected
Get the latest updates from
MIT Technology Review
Discover special offers, top stories, upcoming events, and more.