U.S. Stocks Drift amid China Trade Talks; $133 Million ICO Shuts Down Over Regulation

U.S. stocks traded mixed on Thursday, as investors carefully monitored ongoing trade negotiations with China following a string of positive developments in recent weeks. Basis, an up-and-coming stablecoin project, has confirmed it will close operations and refund investor accounts over regulatory bottlenecks with the Securities and Exchange Commission.

Rally Loses Steam

After a strong midweek performance, Wall Street’s major indexes struggled to regain momentum on Thursday. The Dow Jones Industrial Average pared much of its 200-point gains. It eventually settled at 24,596.30, having gained 69.03 points, or 0.3%.

The broader S&P 500 Index pared losses to finish flat at 2,6050.53. Five of 11 primary sectors recorded losses, led by materials and financials. On the opposite side of the ledger, defensive plays tied to utilities and consumers outperformed the market.

The technology-focused Nasdaq Composite Index declined 0.4% to finish at 7,070.33.

Trade Talks Take Positive Turn

Progress on a comprehensive trade agreement between the U.S. and China appears to be headed in the right direction after Reuters reported that Chinese state-owned enterprises were loading up on American-made agricultural products. In a report published Wednesday, Reuters said that government-backed companies held 500,000 tons of U.S. soybeans.

Earlier in the week, Hacked confirmed that China was shifting course on an industrial blueprint that prioritized domestic companies over foreign competition. The Made in China 2025 plan will likely get a makeover in the near future to allow greater competition in the domestic market. This means potentially greater access by U.S. companies to vital Chinese industries.

China and the U.S. are in the midst of a 90-day truce, which came out of a face-to-face meeting between leaders of both countries in Buenos Aires earlier this month. China has already lowered tariffs on U.S. autos to 15% from 40% while President Trump has delayed a tariff hike on $200 billion worth of Chinese goods initially scheduled for Jan.1.

Basis Stablecoin Shuts Down

One of the biggest stablecoin projects to come out of the ICO boom confirmed it was closing down Thursday, citing regulatory concerns in the United States. Basis, which raised $133 million via initial coin offering, will begin the process of refunding investors in the coming days.

Nader Al-Naji, CEO of the company behind Basis, Intangible Labs, told Forbes that there was no way his project could avoid security classification – a label many in the industry consider undesirable.

“We met with the SEC to clarify a lot of our thinking,” Al Naji said. “The SEC generally avoids saying that something will definitely be one way or the other. But from that meeting we got the impression that we would not be able to avoid securities classification.”

The U.S. Securities and Exchange Commission has warned cryptocurrency startups that their token offerings are subject to federal oversight and that regulators make no distinction between “utility” assets and securities. The only notable exceptions are bitcoin and Etheruem, which the SEC deems to be “sufficiently decentralized” to be considered securities.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi