Coinbase CEO hints its new layer-2 network could include AML measures

Coinbase main enforcement Brian Armstrong has hinted that the firm’s caller Layer-2 blockchain web Base whitethorn beryllium subjected to transaction monitoring and anti-money laundering measures astatine launch.

In an interview with Joe Weisenthal connected Bloomberg Radio connected Mar. 6, Armstrong acknowledged that Base has immoderate centralized components today, adding “it volition beryllium much and much decentralized implicit time.”

However, helium past suggested that determination volition beryllium transaction monitoring and AML requirements for users of the caller layer-2 network.

He suggested that Coinbase volition person a work successful presumption of transaction monitoring successful the aboriginal days, adding:

“I deliberation that the centralized actors are the ones that are astir apt going to person the astir work to debar wealth laundering issues and having transaction monitoring programs and things similar that.”

Armstrong’s comments were besides highlighted up by decentralization advocator Chris Blec successful a Twitter station connected Mar. 7.

— Chris Blec (@ChrisBlec) March 6, 2023

Base is an Ethereum layer-2 web that offers a secure, low-cost, developer-friendly mode for users to physique decentralized apps, according to Coinbase.

It is being developed with the “OP Stack” utilized by Optimism which volition alteration high-speed transactions connected Ethereum. Base was unveiled connected Feb. 23 and is presently successful the testnet phase, Coinbase has yet to supply a mainnet motorboat day but it is expected successful Q2, 2023.

— Coinbase (@coinbase) February 23, 2023

Blec has antecedently warned astir Coinbase’s latest layer-2 offering successful a blog post released successful precocious February, 5 days aft the firm announced Base.

He said that layer-2 infrastructure was rather centralized due to the fact that they usage “sequencers” which are “nodes that conception and execute L2 blocks portion transmitting users’ actions from L2 to L1.”

Coinbase, a licensed wealth transmitter, volition beryllium operating the sole sequencer for Base. This raised the question of whether Base would besides legally necessitate know-your-customer (KYC) requirements making it the archetypal ever L2 to bash so.

Related: L2 is important to Ethereum decentralization, censorship resistance, says researcher

Coinbase hasn’t confirmed oregon denied whether Base would beryllium implementing KYC and AML measures. Blec commented:

“Isn’t it ironic that “DeFi” is heading toward being controlled by the entities that it was primitively expected to beryllium battling?”

However, the crypto assemblage and Ethereum advocates person said Base was a “massive assurance vote” for Ethereum.

Cointelegraph reached retired to Coinbase for remark but has not received a effect by the clip of publication.