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Bankless founder's top ten reasons to be bullish on Base! Delphi Labs legal advisor: Will attract regulatory trouble

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The leading U.S. cryptocurrency exchange, Coinbase, sparked widespread discussion in the crypto community this week with the launch of the L2 solution Base. Whether in support or opposition, there are reasons for both sides. This article compiles the reasons favored by the well-known crypto media, Bankless, while also supplementing the regulatory concerns raised by legal advisors at the investment research firm, Delphi Labs.

Ten Reasons Bankless Founder Supports Base

Bankless founder Ryan Sean Adams has expressed his strong support for Coinbase's launch of the L2 solution Base on his Twitter account. Here are his ten reasons:

1. By choosing Ethereum instead of developing their own L2, they have shown strong trust in Ethereum.

2. This precedent will lead other crypto companies to follow suit, followed by Fintech companies, and then banks. Ultimately, the world will use Ethereum as a settlement and property system.

3. This is the most decentralized way for an exchange to launch a chain, with no token, non-closed platform, and completely open source. This will contribute to the value of the crypto industry, more DeFi, less CeFi.

4. If Coinbase can redirect its existing 110 million verified users to become Layer 2 users, this number will be 10 times the current native crypto users.

5. This will be the answer when regulators ask the crypto industry, "How do you protect retail investors without our control?" The answer is through code regulation, a trustless monetary system built on transparent and open-source DeFi protocols.

6. This is very bullish for Ethereum block space demand.

7. This motivates Coinbase to establish public goods infrastructure like EIP-4844, accelerating industry progress.

8. Coinbase's progress with their legal and compliance team in the US is positive, as the current regulatory environment in the US is the most stringent I have ever seen. If they want to oppose decentralization, they must oppose their people.

9. This will strengthen L2 infrastructure, tools, and development.

10. This demonstrates reliable neutral technology that no one can control or tamper with.

Delphi Labs Legal Advisor: Likely to Attract Regulatory Trouble

While many are optimistic about Coinbase's new developments, Gabriel Shapiro, legal advisor at research firm Delphi Labs, raises legal concerns about Base.

Gabriel Shapiro points out that according to Coinbase's development plan for Base, the documentation states that Base is in the 0th stage of optimistic rollup. At this stage, Base is still a centralized blockchain, essentially more like a beautified enterprise blockchain that "may" move towards decentralization in the future.

Although Base will not issue tokens and will use ETH, providing some regulatory protection, Gabriel Shapiro believes this alone is far from sufficient. As Coinbase is the only significant company registered with the SEC in the crypto field, the strict SEC will closely monitor Coinbase's every move and try to find loopholes.

Additionally, many L2 solutions have some centralized components, making it difficult for teams running core infrastructure to defend themselves when the SEC accuses them of being securities brokers or agents.

Therefore, Gabriel Shapiro believes that if Coinbase decides to launch Base due to regulatory factors, it is not a good decision and may affect others. They should wait until all infrastructure can achieve decentralization before doing so.