Coinbase’s Base will likely feature transaction monitoring, AML measures

Coinbase CEO Brian Armstrong said on March 6 that his company’s layer-2 network, Base, will likely feature transaction monitoring and anti-money laundering measures.

Base will feature compliance measures

Armstrong said during an interview with Bloomberg:

“Base has some centralized components today but it’s going to become more and more decentralized over time as it grows. I think we have responsibilities in terms of transaction monitoring … things like that that we have to look at in the early days.”

Armstrong suggested that centralized actors will likely become responsible for avoiding money laundering and maintaining transaction monitoring programs over time. It is unclear whether Armstrong intended this statement to apply to centralized actors operating on Base or to centralized actors in general.

Though Base will be open to all developers, Coinbase’s initial announcement suggested that Base will be a “home for Coinbase’s on-chain products.” Presumably, any existing products that Coinbase integrates with Base will maintain their original KYC/AML measures.

That earlier announcement also suggested that Base will become “progressively decentralized” but, in doing so, did not suggest a lack of regulatory compliance.

What Is Coinbase’s Base?

Coinbase initially announced Base on Feb. 23. At that time, the company said it plans to build the platform in collaboration with Optimism, an existing layer-2 project for Ethereum. Coinbase will join Optimism as a core developer and use the OP Stack.

The company additionally noted at that time that Base will work with Ethereum itself, other layer-2 networks, and compatible layer-1 blockchains such as Solana.

Base is currently in testnet, available to developers but not yet applicable to actual use cases. Coinbase has not announced a mainnet launch date.

Armstrong noted today that Base is intended to increase scalability and usability on Ethereum and related networks, driving transaction fees down to one cent or less.

Base does not have its own token, contrary to earlier speculation.