Coinbase exec claims Layer-2 Network could include AML measures
- Base’s upcoming launch is expected to come with AML features
- Base is an Ethereum layer-2 network that offers users a secure and convenient way to develop decentralised applications
Brian Armstrong, CEO of Coinbase, has suggested that the company’s upcoming layer-2 blockchain network Base may be launched with transaction monitoring and anti-money laundering controls.
Armstrong claimed that Base currently has some centralized components in an interview with Joe Weisenthal on Bloomberg Radio. However, according to the exec, “it will be more and more decentralized over time.” That being said, Armstrong clarified that users of the new layer-2 network will be subject to transaction monitoring and AML rules.
High expectations from Base
According to Coinbase’s CEO, the crypto-exchange will be responsible for transaction monitoring. He continued,
“I think that the centralized actors are the ones that are probably going to have the most responsibility to avoid money laundering issues and having transaction monitoring programs and things like that.”
Chris Blec, a proponent of decentralization, brought attention to Armstrong’s remarks in a March 7 tweet.
Odd Lots @TheStalwart directly asked @coinbase CEO @brian_armstrong how CB will navigate KYC/AML obligations on @BuildOnBase.
Armstrong tap danced around an answer. In the last 10 seconds he hints there WILL be some sort of KYC at launch.
Wish Joe had pressed for more clarity. pic.twitter.com/Q4TBV5MbS0
— Chris Blec (@ChrisBlec) March 6, 2023
Base is an Ethereum layer-2 network that provides customers with a safe, affordable, and developer-friendly means to create decentralized apps. It is being created using Optimism’s “OP Stack,” which will allow for quick transactions on Ethereum. Base entered the testnet phase on February 23 after its unveiling. Although Coinbase hasn’t yet announced a mainnet launch date, it is anticipated to be in Q2 2023.
Last Tuesday, the share price of Coinbase appreciated by about 10% to $64.83, marking the biggest daily hike since the stock increased by more than 13% on February 15. Before the markets opened on February 23, the company announced a brand-new network called Base. Since then, Coinbase shares have risen by about 6% from the day’s closing price of $61.18.
Instead of communicating directly with the primary, underlying network, the solution can save gas costs and improve the processing time for transactions. In fact, Base makes transactions 10 times more affordable than when communicating with Ethereum directly.
In a blog post published in late February, five days after the company revealed Base, Blec issued a warning against Coinbase’s most recent layer-2 offering.
According to him, the employment of “sequencers,” which are “nodes that generate and execute L2 blocks while relaying users’ activities from L2 to L1,” the layer-2 infrastructure is extremely centralized.
The single sequencer for Base will be run by Coinbase, a licensed money transmitter. This has raised the issue of whether Base will become the first-ever L2 to formally impose Know-Your-Customer (KYC) rules.