Coinbase Launches Verified Pools to Boost DeFi Security and Compliance
2min read Coinbase, a prominent crypto exchange, has introduced Verified Pools, a new service aimed at reducing counterparty risk for decentralized finance (DeFi) participants. This service consists of liquidity pools that facilitate digital asset trades and are exclusively available to users who have completed Coinbase’s identity verification process. The launch of Verified Pools is part of Coinbase’s broader strategy to enhance regulatory compliance and security, particularly as it seeks to scale back access to some offerings, especially in regions with stringent regulations.
Verified Pools are designed to cater to both institutional and retail traders, offering KYC-verified liquidity pools that maintain the openness and efficiency of on-chain markets. The service is powered by Coinbase’s Ethereum-centric Layer 2 network, Base, and utilizes the Uniswap v4 protocol. Additionally, coinbase has partnered with Gauntlet, a risk management firm, to bolster liquidity. The pools are non-custodial, meaning users retain control over their assets, which is a significant advantage for those concerned about security and regulatory compliance.
The KYC element of Verified Pools is a critical component of Coinbase’s efforts to remain compliant with regulatory requirements. This move is particularly relevant as Coinbase seeks to expand its offerings while navigating the complex regulatory landscape. The service is connected via Coinbase’s "institutional-grade" Prime Onchain Wallet, Coinbase Wallet, or any other wallet stamped with a Coinbase Verifications credential. Initially, Verified Pools will be available in select regions, including the U.S., Singapore, Netherlands, British Virgin Islands, Cayman Islands, and Channel Islands.
Users must complete Coinbase’s KYC process to participate in Verified Pools, providing a higher level of assurance for institutions that have hesitated to join DeFi markets due to concerns over regulatory compliance and security. This move is likely to attract more institutional investors who have been wary of the regulatory risks associated with DeFi. Coinbase appears to be in a favorable position under the current administration, which is en route to making the country the “crypto capital” of the world with pro-crypto policies. After a years-long legal battle, the U.S. Securities and Exchange Commission (SEC) recently dropped its lawsuit against the exchange, clearing the way for Coinbase to operate more freely in the country.
Aside from Verified Pools, Coinbase has revealed plans to offer 24/7 Bitcoin and Ethereum futures trading on its Coinbase Derivatives platform in the coming weeks. The exchange also announced it will launch perpetual-style futures in the U.S., with extended expiration dates, further expanding its futures trading options. These developments underscore Coinbase’s commitment to providing a comprehensive suite of trading services that cater to the needs of both institutional and retail investors. The introduction of Verified Pools is a significant step forward in Coinbase’s efforts to enhance regulatory compliance and security, while also providing a more efficient and transparent trading experience for its users. 
Ask Aime: How does Coinbase's Verified Pools service impact the DeFi market and its users?
