Paul Grewal, the chief authorized officer of Coinbase, a number one American crypto agency, has defended the corporate’s native layer-2 blockchain, Base, following a latest argument by a Commissioner on the U.S. Securities and Change Fee (SEC) that such infrastructures ought to be handled equally to securities exchanges just like the Nasdaq and NYSE.

Launched in 2023, Base chain is a low-cost, developer-focused blockchain constructed on prime of Ethereum. It has since develop into a preferred scaling answer for decentralized finance (DeFi) functions.

Base is a Layer-2 Scaling Resolution that Processes Transactions in Parallel to Ethereum earlier than Posting them on the Mainnet

In a sequence of X threads, Grewal stated L2 sequencers like Base function extra as a general-purpose blockchain infrastructure that processes transactions and messages in batches earlier than posting them on the Ethereum mainnet, moderately than an exchange-like platform for matching securities trades.

He reiterated that buying and selling actions occur inside functions constructed on prime of Base, equivalent to automated market makers (AMMs) or centralized restrict order ebook protocols, and never on the L2 layer itself. The Coinbase CLO additionally famous that classifying Base as an “alternate” creates confusion about what performance the same L2 sequencers really serve.

Grewal’s feedback got here amid rising debate over the position of Layer-2 sequencers, with SEC Commissioner Hester Peirce warning that centralized sequencers resemble alternate matching engines and will very effectively fall throughout the monetary watchdog’s regulatory jurisdiction. Nevertheless, by the company’s personal definition, an alternate is a market that matches patrons and sellers of securities.

Classifying L2s as an Change may Hinder Innovation and Progress in Blockchain Scaling, Warns Coinbase CLO Paul Grewal

He in contrast Base to an off-chain model of cloud service suppliers like AWS, the place the infrastructure merely runs code within the type of sensible contracts that builders present, which may embody datasets like funds, calls, messages, and exchanges. The sequencer merely executes and orders transactions deterministically.

This distinction is vital as a result of it determines who’s accountable for regulatory compliance. Trade specialists warned that if sequencers are handled as exchanges, then it could impose heavy compliance burdens on infrastructure suppliers like Base, which may hinder innovation on Ethereum’s scaling stack and sluggish the expansion of the broader DeFi ecosystem.

Grewal concluded his arguments by stating that L2 sequencers allow “scalable, safe” on-chain transactions that assist scale Ethereum compute, enabling a variety of functions in a brand new economic system. “Mislabeling them is actively spreading FUD and overlooks the crucial position they play in scaling.”

Base Hints at Native Token Launch, Declares Solana Help on Bridging Platform

The continued regulatory debate coincides with a shift in Coinbase’s long-term strategy to Base. Throughout the lately held BaseCamp 2025 occasion in Vermont, Jesse Pollak, head of Base chain, introduced that the community is planning to launch a local token. This marked a departure from the corporate’s earlier stance that it could not problem its personal cryptocurrency. 

Nevertheless, Pollack emphasised that no closing choice has been made on the design, governance, or timeline for the token, however described the mission as a part of Base’s efforts to speed up decentralization whereas increasing alternatives for on-chain builders and creators.

Aside from information concerning a possible token launch, Base additionally introduced an open-source bridging platform with Solana assist that may allow interoperability between ERC-20 (Ethereum) and SPL (Solana) commonplace belongings. These developments signify the speedy development of the ecosystem amid the unresolved regulatory questions dealing with Layer-2 infrastructure suppliers.

Base Positions Itself as a Sturdy Contender for the Subsequent DeFi Wave, TVL Nears $5 Billion

Ethereum dominates the DeFi market, with $86.3 billion in whole worth locked (TVL) on all platforms deployed on the Layer-1 blockchain. Whereas Base presently holds solely 6% of that TVL, at $4.83 billion, throughout greater than 700 protocols, it’s displaying regular development regardless of short-term fluctuations. Token liquidity on the community is basically pushed by stablecoins, which account for $4.4 billion in circulating provide. U.S. dollar-backed USDC, issued by Circle, and Singapore dollar-pegged XSGD, issued by StraitsX, are presently the one stablecoins obtainable on Base.

Decentralized alternate (DEX) volumes are closing in on $2 billion, whereas perpetuals buying and selling has added $1.1 billion to Base’s market worth, positioning it among the many most liquid L2 networks. Bridged liquidity is by far the largest contributor, standing at almost $20 billion, suggesting massive capital inflows which are but to be totally deployed in DeFi protocols. DEXs, together with Uniswap, Aave, Aerodrome, and Spark, are fueling liquidity on Base.

Whereas Ethereum and Solana nonetheless command the DeFi house, Base chain’s speedy rise, supported by Coinbase’s sturdy infrastructure and powerful person base, is putting it as a powerful contender within the subsequent wave of DeFi growth.