According to recent reports, the algorithmic stablecoin project, Basis, will be closing down and returning the majority of more than $130M to stakeholders, including Andreessen Horowitz.

While this is a setback to the development of stablecoins in general, which we believe to be important catalysts towards the mass adoption of crypto, it is not entirely a bad thing for crypto.

Many big stablecoin projects launched earlier this fall, for example, X, y, and z in (October). When fears about the market-leading stablecoin, Tether or USDT, took hold, the market moved to many of the other stablecoins that were launched. As opposed to X, Y, and Z, Basis took a much more measured approach and was slated to launch in 2019. One factor in Basis’s closure may have been this delay in launch.

Another reason behind Basis’ closure appears to be regulatory hurdles surrounding its particular model. As we discussed in our article on stablecoins, stability in price is achieved by pegging a coin against a collateral asset, such as fiat. In Basis’ case, this was achieved by the issuance of “bond tokens”, which provided leverage against price fluctuations. However, in the United States, such bond tokens are deemed securities by the U.S Securities and Exchange Commission (SEC), which exposes Basis to several legal issues.

That being said, Basis’ closure does not mean all stablecoins will suffer a similar fate. There are fiat-pegged models which involve traditional banks (USDT) and also crypto-based models, both of which seem to be moving forward positively.

The Basis incident does not mean investors should discard stablecoins, but they should hedge against such risks by considering more traditional cryptocurrencies, such as Bitcoin and Ethereum, which are not considered securities.


As of the publication date of this report, BitBull Capital Management LLC and its affiliates (collectively “BitBull”), others that contributed research to this report and others that we have shared our research with (collectively, the “Investors”) may have long or short positions in and may own options on the token of the project covered herein and stand to realize gains in the event that the price of the token increases or decreases. Following publication of the report, the Investors may transact in the tokens of the project covered herein. All content in this report represent the opinions of BitBull. BitBull has obtained all information herein from sources they believe to be accurate and reliable. However, such information is presented “as is,” without warranty of any kind – whether express or implied.

This document is for informational purposes only and is not intended as an official confirmation of any transaction. All market prices, data and other information are not warranted as to completeness or accuracy, are based upon selected public market data, and reflect prevailing conditions and BitBull’s views as of this date, all of which are accordingly subject to change without notice. BitBull has no obligation to continue offering reports regarding the project. Reports are prepared as of the date(s) indicated and may become unreliable because of subsequent market or economic circumstances.

Any investment involves substantial risks, including, but not limited to, pricing volatility, inadequate liquidity, and the potential complete loss of principal. This report’s estimated fundamental value only represents a best efforts estimate of the potential fundamental valuation of a specific token, and is not expressed as, or implied as, assessments of the quality of a token, a summary of past performance, or an actionable investment strategy for an investor.

This document does not in any way constitute an offer or solicitation of an offer to buy or sell any investment or token discussed herein.

The information contained in this document may include, or incorporate by reference, forward-looking statements, which would include any statements that are not statements of historical fact. These forward-looking statements may turn out to be wrong and can be affected by inaccurate assumptions or by known or unknown risks, uncertainties and other factors, most of which are beyond BitBull’s control. Investors should conduct independent due diligence, with assistance from professional financial, legal and tax experts, on all tokens discussed in this document and develop a stand-alone judgment of the relevant markets prior to making any investment decision.