Coinbase Plans Proof of Reserves for New Bitcoin Wrapper

Coinbase will soon add proof of reserves to its new Bitcoin wrapper, cbBTC. A company spokesperson confirmed this on September 30. This move will make cbBTC as transparent as other Bitcoin wrappers like WBTC and 21BTC.

Lukas Staniszewski, a Coinbase product manager, shared on Twitter that the team had planned proof of reserves from the start and is working hard to build it. Coinbase quietly updated a blog post to mention this plan but hasn’t made a big announcement yet.

Source: X Post

The company recently faced criticism for seeming less transparent than other Bitcoin wrappers. Some people even spread false rumors that Coinbase gave unbacked Bitcoin IOUs to BlackRock, a company interested in crypto ETFs.

A developer known as 0xngmi pointed out that most bridges, including WBTC, offer proof of reserves, but Coinbase didn’t. They said cbBTC fell short in terms of transparency.

Coinbase’s cbBTC Rises with Transparency and Security Boosts

Despite these concerns, cbBTC has become popular since its launch on September 12. It now has a total value of about $250 million. The wrapper stands out by promising to pay back users if certain cyber attacks cause losses. New York’s Department of Financial Services also monitors it closely.

Users can create cbBTC on Ethereum and Base, Coinbase’s Layer-2 network. The company plans to launch it on Solana, as announced on September 20.

Adding proof of reserves will address transparency concerns and put cbBTC on par with its rivals. It shows Coinbase is listening to user feedback and working to improve trust in its products.

The move comes when transparency is increasingly important in the crypto world. Many users and regulators demand clear proof that digital assets are fully backed. By adding proof of reserves, Coinbase is taking a step toward meeting these expectations.

As the crypto market evolves, features like proof of reserves may become standard for Bitcoin wrappers and similar products. Coinbase’s decision to implement this feature could set a precedent for other companies in the industry.

Furthermore, 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 risk.