The news means that customers wishing to use Bitcoin for payments must have a Coinbase account. According to representatives, the company has removed support for native Bitcoin (BTC) and other UTXO coins from its merchant payment platform, Coinbase Commerce. This decision was communicated in a thread on X (formerly Twitter) on 18 February 2024. Dowling cited challenges in updating the platform's EVM payment protocol for Bitcoin as the reason behind this move.
The new Commerce product focuses on onchain payment details and supports a wide range of assets, including native and ERC-20 tokens. Payments are automatically converted to USDC onchain at a guaranteed rate for merchants. Delivering similar capabilities on the Bitcoin blockchain without smart contracts and stablecoins proved to be challenging, leading to the removal of native Bitcoin and UTXO support.
Customers using Coinbase Commerce will still have the option to pay with Bitcoin if they have a Coinbase account. Additionally, Coinbase is working on integrating the Lightning Network into its platform to enable Lightning payments in the future.
Coinbase representatives expressed optimism about the potential for Lightning Network to facilitate commerce payments in the future. The Lightning Network is a payment protocol designed to enhance transactions within the Bitcoin blockchain, with its adoption starting in 2017. In a broader perspective, they highlighted the importance of moving away from layer 1 to improve transaction fees and confirmation times for crypto payments, thus promoting mainstream adoption.
Bitcoin transactions are based on the UTXO model, which offers transparency and security. This model differs from Ethereum's account model, resembling traditional bank accounts and offering more flexibility. UTXO model is also used by Bitcoin forked coins like Dogecoin (DOGE), Litecoin (LTC), Dash (DASH), and Bitcoin Cash (BCH).
The decision to remove native Bitcoin support has faced criticism from the community on social media platforms. Some users have raised concerns about how this decision affects Bitcoin adoption, questioning the assumption that every customer can open a Coinbase account or would want one for making payments.
In January 2024, Coinbase faced scrutiny from a federal judge in Manhattan and the US Securities and Exchange Commission (SEC). The main issue at hand was the differing interpretations of digital assets' classification as securities. This case holds significant implications for the cryptocurrency industry, as it centres around Coinbase's motion to dismiss the SEC's lawsuit, which accuses the company of violating securities regulations.
During the hearing, judges delved into legal precedents that define securities and analysed the characteristics of various crypto tokens traded on Coinbase, such as Solana, Cardano, and Polygon. The SEC argues that these tokens should be registered as securities, while Coinbase maintains that crypto assets, unlike traditional securities, do not meet the criteria of an investment contract.
Every day we send out a free e-mail with the most important headlines of the last 24 hours.
Subscribe now