TLDR
- Coinbase CLO Paul Grewal defends the Base network, arguing it functions as blockchain infrastructure, not a securities exchange.
- Grewal clarifies that transaction matching occurs within applications built on Base, not the Layer-2 network itself.
- The SEC defines exchanges as platforms that match buyers and sellers of securities, but Base does not meet this criterion.
- Ripple’s David Schwartz supports Grewal’s position, comparing Layer-2 networks to cloud providers like AWS.
- Coinbase is exploring the potential launch of a Base network token, though no decisions have been made.
Coinbase CLO Paul Grewal has rejected claims that the company’s Base network qualifies as a securities exchange. He emphasized that Base operates strictly as a Layer-2 blockchain and not as a trade-matching platform. His statements come amid increasing scrutiny from U.S. regulators.
Grewal Defends Base’s Role in DeFi Infrastructure
Paul Grewal, Coinbase CLO, clarified that Base does not match securities trades but only facilitates blockchain activity.
“Base is just a normal blockchain,” he said during an interview with Bankless. “It’s not matching buyers and sellers of securities.”
He further explained that trade matching happens within apps on Base, not the Base protocol itself. Automated market makers and order book platforms perform these functions independently. Therefore, Grewal argued that the SEC should not regulate Base as an exchange.
Should @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 layer2. But that doesn’t change its relationship to securities laws.”
“We are not matching buyers and sellers of securities…… pic.twitter.com/Cd4M8kizTZ
— Bankless (@BanklessHQ) September 26, 2025
Coinbase CLO pointed out that Base operates similarly to cloud providers, hosting applications without engaging in trading. Ripple CTO David Schwartz supported this view, comparing Layer-2s to AWS. The analogy was aimed at reinforcing that infrastructure is not the same as an exchange.
Coinbase CLO Pushes Back on SEC’s Exchange Definition
The U.S. SEC defines an exchange as a system that brings together securities buyers and sellers. Commissioner Hester Peirce has warned that Layer-2 sequencers may resemble matching engines. However, Coinbase CLO asserted that Base’s design avoids these conditions.
He maintained that Base does not function as a central intermediary for securities transactions. Instead, it acts as a foundational blockchain supporting application-level innovation. According to Coinbase CLO, this distinction protects Base from exchange classification.
Grewal also warned that mislabeling Base could severely impact development. He stated that applying exchange rules would increase costs and reduce efficiency. Consequently, Coinbase CLO urged regulators to consider the technical facts before imposing rules.
Base Token and Bridge Developments Signal Ecosystem Growth
At BaseCamp 2025, Coinbase revealed that it is exploring a potential Base token. Jesse Pollak, Base lead, announced the change, marking a shift from earlier positions. Coinbase CLO acknowledged this update but said no token decisions are finalized.
Pollak mentioned that the exploration supports decentralization and developer participation. However, the team has not determined the token’s design, governance, or timeline. Coinbase CLO noted that the token initiative does not affect Base’s regulatory classification.
Base also launched an open-source bridge with Solana during the event. The bridge supports token interoperability between ERC-20 and SPL standards. This move highlights Coinbase’s ongoing push to expand Base’s reach and utility.
Base Surges in DeFi Rankings and On-Chain Activity
Base has emerged as a strong Layer-2 player with $4.83 billion in total value locked (TVL). Coinbase CLO highlighted this growth as proof of Base’s utility and independence. Over 700 protocols now operate on the network.
Daily decentralized exchange volumes on Base approach $2 billion, with perpetuals adding $1.1 billion more. Bridged liquidity has reached nearly $20 billion, indicating sustained capital inflows. Base processed nearly 740,000 addresses in a single day.
Key protocols on Base include Aerodrome, Spark, Uniswap, and Aave. While some rely on incentives, others show real growth and adoption. Coinbase CLO emphasized that Base’s efficiency and volume reflect a healthy and expanding network.
