Coinbase has introduced Verified Pools, a liquidity pool that requires Know-Your-Customer (KYC) verification with the aim of promoting DeFi adoption while minimizing counterparty risks.
This initiative offers both institutional and retail traders compliant access to liquidity on-chain.
Coinbase’s CEO, Brian Armstrong, emphasized that certain digital assets necessitate particular regulatory approvals under US legislation. He pointed out that Verified Pools will enable users to verify their identities and trade assets securely on-chain, setting a new benchmark for compliant participation in DeFi.
Verified Pools
Verified Pools will enable users to link their wallets—such as Coinbase Wallet, Prime Onchain Wallet, or third-party wallets—to a Coinbase Verifications credential. This credential serves as a trust indicator, confirming user identities before they engage with liquidity pools.
The pools are constructed on Base, Coinbase’s layer-2 blockchain, and utilize Uniswap v4 to enhance the capabilities of smart contracts.
Furthermore, Coinbase has teamed up with Gauntlet, a risk management service, to optimize configurations for liquidity pools and maintain overall market stability.
At present, Verified Pools are accessible to users located in the United States, Singapore, the Netherlands, the British Virgin Islands, the Cayman Islands, and the Channel Islands.
Growing Institutional Interest
The rollout of Verified Pools aligns with an increasing interest in crypto from institutional investors.
A recent report revealed that institutional investors plan to enhance their positions in digital assets by 2025.
Conducted in January, the survey collected responses from over 350 institutional investors, showing that most already possess cryptocurrency and intend to allocate at least 5% of their portfolios to digital assets.
The findings indicate that these investors see cryptocurrency as a significant opportunity for risk-adjusted returns in the next three years. While Bitcoin continues to lead the market, investors are also branching out into altcoins like Solana and XRP.
Additionally, the report suggests that enthusiasm for digital assets could increase markedly if spot altcoin ETFs receive approval in the US.
The report also noted that institutional sentiment is being fueled by expectations of clearer regulatory frameworks, which could unlock new opportunities, especially in crypto custody. However, the evolving regulatory environment remains a significant challenge for the industry.
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