Coinbase CLO Says Base Is “Not an Exchange” Amid SEC Scrutiny

Coinbase’s chief legal officer, Paul Grewal, has defended the company’s Ethereum Layer-2 network, Base, against suggestions that it should be regulated as a securities ￰2￱ in an interview with Bankless, Grewal argued that Base functions as blockchain infrastructure rather than a platform for matching securities ￰3￱ @base be regulated like the Nasdaq exchange? Here's what @coinbase CLO @iampaulgrewal has to say: “Base is just a normal blockchain… Yes it’s a ￰4￱ that doesn’t change its relationship to securities laws.” “We are not matching buyers and sellers of securities…… ￰5￱ — Bankless (@BanklessHQ) September 26, 2025 “Base is just a normal blockchain,” Grewal said.

“Yes, it’s a ￰6￱ that doesn’t change its relationship to securities ￰7￱ are not matching buyers and sellers of ￰8￱ are just a blockchain layer.” He stressed that transaction matching occurs within applications built on top of Base, such as automated market makers or centralized limit order book protocols, not at the Layer-2 level itself. Coinbase’s Base Balances SEC Scrutiny With Decentralization Push His comments come amid growing debate over the role of Layer-2 ￰9￱ ￰10￱ and Exchange Commission defines an exchange as a marketplace that matches buyers and sellers of ￰11￱ Hester Peirce has previously warned that centralized sequencers could resemble exchange matching engines and therefore fall within the SEC’s ￰12￱ CTO David Schwartz has backed Grewal’s position, likening Layer-2 networks to cloud providers such as Amazon Web Services, which host exchange code but are not classified as exchanges ￰13￱ co-founder Vitalik Buterin has also praised Base for combining centralized sequencing with Ethereum’s decentralized security model, describing the approach as key to improving user experience. @VitalikButerin defends @Coinbase 's Base blockchain as a genuine Layer 2 with non-custodial security guarantees through the Ethereum base layer. #Ethereum #Base ￰0￱ — ￰14￱ (@cryptonews) September 23, 2025 Base was launched in 2023 as a low-cost, developer-focused chain built on ￰15￱ has since become a popular scaling solution for decentralized finance ￰16￱ warned that treating Layer-2 infrastructure as an exchange would impose heavy compliance burdens that could hinder innovation and slow the growth of the broader ￰17￱ regulatory debate coincides with a shift in Coinbase’s approach to Base’s long-term ￰18￱ the BaseCamp 2025 event in Vermont, Jesse Pollak, who leads the Base project, revealed that the team is “beginning to explore” launching a native network ￰19￱ has explored launching a network token, reversing Coinbase’s earlier stance. @jessepollak and @brian_armstrong confirmed discussions. #Coinbase #Base ￰1￱ — ￰20￱ (@cryptonews) September 15, 2025 The remarks marked a departure from Coinbase’s previous position that Base would not issue a ￰21￱ emphasized that no decision has been made on the design, governance, or timeline for a token launch but described the exploration as part of efforts to accelerate decentralization and expand opportunities for developers and ￰22￱ comments came a few weeks after the token distribution by Consensys’ Linea network, which released more than 9.3 billion LINEA tokens to eligible ￰23￱ token discussions, Base also announced an open-source bridge with Solana at BaseCamp, allowing interoperability between ERC-20 and SPL ￰24￱ developments show both the rapid growth of the Layer-2 ecosystem and the unresolved regulatory questions facing infrastructure ￰25￱ Emerges as a Growing DeFi Powerhouse Amid Shifts in TVL Rankings Ethereum continues to dominate decentralized finance with $86.3 billion in total value locked (TVL), but Coinbase’s Base network is quickly establishing itself as one of the most active ecosystems in the ￰26￱ currently holds $4.83 billion in TVL across more than 700 protocols, showing steady monthly growth despite short-term ￰27￱ is largely stablecoin-driven, with $4.4 billion in circulating supply on the network, underpinning lending and trading activity.) volumes approach $2 billion, while perpetuals trading adds another $1.1 billion—placing Base among the most liquid Layer-2s.

Chain-level efficiency also stands ￰28￱ the past 24 hours, Base captured $237,000 in fees, nearly all of which were converted to ￰29￱ network processed activity from nearly 740,000 addresses in a single day, showing its broad retail and institutional adoption.