Coinbase CLO Says Base Is “Not an Exchange” Amid SEC Scrutiny
Coinbase’s chief authorized officer, Paul Grewal, has defended the corporate’s Ethereum Layer-2 community, Base, in opposition to solutions that it ought to be regulated as a securities trade.
Speaking in an interview with Bankless, Grewal argued that Base capabilities as blockchain infrastructure slightly than a platform for matching securities trades.
“Base is only a regular blockchain,” Grewal mentioned. “Yes, it’s a Layer-2. But that doesn’t change its relationship to securities legal guidelines. We usually are not matching consumers and sellers of securities. We are only a blockchain layer.”
He harassed that transaction matching happens inside functions constructed on prime of Base, reminiscent of automated market makers or centralized restrict order e-book protocols, not on the Layer-2 degree itself.
Coinbase’s Base Balances SEC Scrutiny With Decentralization Push
His feedback come amid rising debate over the function of Layer-2 sequencers. The U.S. Securities and Exchange Commission defines an trade as a market that matches consumers and sellers of securities.
Commissioner Hester Peirce has beforehand warned that centralized sequencers may resemble trade matching engines and due to this fact fall inside the SEC’s jurisdiction.
Ripple CTO David Schwartz has backed Grewal’s place, likening Layer-2 networks to cloud suppliers reminiscent of Amazon Web Services, which host trade code however usually are not categorized as exchanges themselves.
Ethereum co-founder Vitalik Buterin has also praised Base for combining centralized sequencing with Ethereum’s decentralized safety mannequin, describing the method as key to bettering consumer expertise.
@VitalikButerin defends @Coinbase‘s Base blockchain as a real Layer 2 with non-custodial safety ensures by way of the Ethereum base layer.#Ethereum #Basehttps://t.co/qdwFwEC9wT
— Cryptonews.com (@cryptonews) September 23, 2025
Base was launched in 2023 as a low-cost, developer-focused chain constructed on Ethereum. It has since change into a well-liked scaling answer for decentralized finance functions.
Grewal warned that treating Layer-2 infrastructure as an trade would impose heavy compliance burdens that might hinder innovation and sluggish the expansion of the broader ecosystem.
The regulatory debate coincides with a shift in Coinbase’s method to Base’s long-term roadmap. At the BaseCamp 2025 occasion in Vermont, Jesse Pollak, who leads the Base venture, revealed that the staff is “beginning to explore” launching a native network token.
Base has explored launching a community token, reversing Coinbase’s earlier stance. @jessepollak and @brian_armstrong confirmed discussions. #Coinbase #Base
https://t.co/5vMMa9mHQ3
— Cryptonews.com (@cryptonews) September 15, 2025
The remarks marked a departure from Coinbase’s earlier place that Base wouldn’t problem a token.
Pollak emphasised that no resolution has been made on the design, governance, or timeline for a token launch however described the exploration as a part of efforts to speed up decentralization and increase alternatives for builders and creators.
The feedback got here just a few weeks after the token distribution by Consensys’ Linea community, which released more than 9.3 billion LINEA tokens to eligible users.
Alongside token discussions, Base additionally introduced an open-source bridge with Solana at BaseCamp, permitting interoperability between ERC-20 and SPL tokens.
The developments present each the fast progress of the Layer-2 ecosystem and the unresolved regulatory questions dealing with infrastructure suppliers.
Base Emerges as a Growing DeFi Powerhouse Amid Shifts in TVL Rankings
Ethereum continues to dominate decentralized finance with $86.3 billion in whole worth locked (TVL), however Coinbase’s Base community is rapidly establishing itself as one of the energetic ecosystems out there.
Base presently holds $4.83 billion in TVL throughout greater than 700 protocols, exhibiting regular month-to-month progress regardless of short-term fluctuations. Liquidity is essentially stablecoin-driven, with $4.4 billion in circulating provide on the community, underpinning lending and buying and selling exercise.
Daily decentralized trade (DEX) volumes method $2 billion, whereas perpetuals buying and selling provides one other $1.1 billion—putting Base among the many most liquid Layer-2s.
Chain-level effectivity additionally stands out. In the previous 24 hours, Base captured $237,000 in charges, almost all of which had been transformed to income. The community processed exercise from almost 740,000 addresses in a single day, exhibiting its broad retail and institutional adoption.
Bridged liquidity stands far larger at almost $20 billion, indicating massive capital inflows that aren’t but absolutely deployed in DeFi protocols.
Protocols fueling the ecosystem embrace Aerodrome, Uniswap, Aave, and Spark. Aerodrome stays a significant liquidity hub, although it leans closely on incentives, leading to damaging internet earnings.
By distinction, Spark has emerged as one of many fastest-growing lending platforms, posting a 41% TVL improve over the previous month. Risk administration companies reminiscent of Gauntlet and Block Analitica additionally spotlight the maturing function of analytics in DeFi.
While Ethereum and Solana nonetheless command bigger ecosystems, Base’s fast rise, backed by Coinbase’s infrastructure and consumer base, is positioning it as a contender within the subsequent wave of DeFi enlargement.
Sustaining progress, nonetheless, might rely on whether or not protocols can scale back reliance on subsidies and preserve long-term liquidity.
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