A startup shuts down and other crypto news this week
Illustration: Sarah Grillo/Axios
BusinessWeek put bitcoin on the cover of its magazine this week, wondering whether "crypto [has] hit the fan." We'd say that still remains to be seen, but in the meantime, here are other important news from this week.
Catch up quick: Bain-backed crypto startup Basis closed; Facebook’s blockchain group is on a hiring spree to reinvent money; and the Securities and Exchange Commission’s crypto czar signaled some flexibility on token offerings.
- Why it matters: A number of so-called "stablecoins" — digital tokens whose value is pegged to other assets — gained prominence this year, and Basis was among the most ambitious, aiming to use algorithms to self-balance its value similarly to a central bank. However, the company said this week that it's shutting down and giving back the funds it raised via an initial coin offering to investors. It blamed regulatory troubles, namely that conforming to current laws and rules would mean straying from its goals.
- Why it matters: Facebook's interest in the space could undoubtedly have a large impact, given the company's large size and influence, but so far it seems to be running into some challenges. It appears to be struggling to hire and acquire teams, both because of its recent scandals and because, as a large centralized collector of user data, it's fundamentally at odds with the spirit of decentralized networks.
- Facebook is said to be looking to build its own cryptocurrency, though sources have told Axios in the last several months that it's been exploring a range of applications and approaches.
- Why it matters: Amid a growing number of enforcement actions and the agency chairman's stance that all initial coin offerings look like securities to him, the SEC's digital assets chief left the door open for some issuers to get no-action letters. In a few rare instances, she said, issuers whose token sales didn't quite fit into the law could get a letter from the SEC's staff saying it won't recommend enforcement actions as long as it takes specific precautions to protect investors.