Coinbase Commerce Drops Bitcoin from Merchant Payment Support

Coinbase Commerce made a surprising move on Sunday, Feb 18. It dropped Bitcoin, the world’s largest cryptocurrency, from its merchant payment support list. Coinbase’s Head of Product, Lauren Dowling, delivered the news to 73 million users. She said it was a “difficult decision” to remove Bitcoin, Litecoin, and UTXO support.

Dowling explained that Coinbase Commerce aimed to streamline crypto payments using smart contracts. The payment protocol ensured on-chain payment recording, supported numerous tokens, and converted payments to USDC. However, Bitcoin’s lack of smart contracts made it incompatible with the EVM-based system.

Coinbase CEO Brian Armstrong clarified users can still transact Bitcoin “off-chain” with exchange accounts. He unveiled plans to integrate Solana and Bitcoin Lightning Network soon. However, discontinuing Bitcoin payments requires both parties to have exchange accounts.

This stipulation sparked community criticism as some users cited jurisdictional issues with exchange accounts. The move disrupts operations for businesses and shoppers relying on the payment protocol.

Coinbase Adapts to Bitcoin Limits, Sparks Strategy Queries

Armstrong acknowledged Bitcoin’s network limitations contributed to the decision. He said integrating Lightning Network addresses scalability and cost issues.

Despite hints at restoring support, requiring exchange accounts limits Bitcoin’s direct merchant payments. This contradicts Coinbase Commerce’s goal of enabling seamless on-chain commerce without operational burdens.

The news comes as regulators increasingly accept Bitcoin for merchant and shopper payments. Coinbase is a major Bitcoin custodian, securing over $30 billion in assets for ETF issuers. Its robust $3.1 billion income and 45% cost-cutting in 2023 didn’t prevent this controversial move.

Rival Binance swiftly integrated Lightning Network to alleviate Bitcoin’s network issues. As the crypto industry evolves, Coinbase’s decision raises questions about its long-term strategy for the pioneering cryptocurrency.

Related Reading | Coinbase Fuels Bitcoin Innovation: $3.6M Gift To Brink

The author’s views are for reference only and shall not constitute investment advice. Before purchasing, please ensure you fully understand and assess the products and associated risks.

Comments (No)

Leave a Reply