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Ethereum co-founder Vitalik Buterin jumped in to defend Base, the Coinbase-backed layer-2 network, from growing doubts about how sequencers work and whether regulators might treat them like exchanges.
Vitalik backs Base
Buterin said Base is “doing things the right way” — using some centralized tools for smoother user experience while still anchored to Ethereum’s decentralized foundation for security. He stressed that Base can’t take custody of funds, stop withdrawals, or seize assets. That makes it a true L2, not a disguised server.
The exchange debate
The controversy started after SEC Commissioner Hester Peirce questioned if sequencers — the systems that order transactions — look too much like “matching engines” in centralized exchanges. If so, regulators might step in. Still, she admitted that if the assets aren’t securities, there’s little for the SEC to enforce.
Coinbase’s response
Paul Grewal, Coinbase’s chief legal officer, compared L2s like Base to Amazon Web Services. AWS runs apps, even exchange apps, but isn’t itself an exchange. Likewise, L2s are infrastructure that batch and process code.
Sequencers explained
Base co-founder Jesse Pollak added that sequencers don’t pair buyers and sellers. They just decide the order of transactions, like a traffic cop keeping cars moving smoothly. Users can also transact directly on Ethereum, keeping things decentralized and censorship-resistant.
Classifying L2s as exchanges could force them into SEC registration and heavy regulation, which is why the crypto industry is pushing back hard.
