- BitGo has overhauled its WBTC custody model after concerns about the risks
- Meow, the founder of Jupiter Exchange, is “pleased” with these changes
BitGo has proposed a new model for its planned Wrapped Bitcoin (WBTC) custody operations. The new model addresses the risk concerns raised during a recent feedback session on X Spaces.
Meow, the pseudonymous founder of the Solana-based Jupiter exchange, applauded the new model. In fact, he claimed that he ‘satisfied‘ with the changes.
“Following this space, they have updated their plans to have Bitgo Singapore retain the backup key instead, which is a much less drastic change from the current setup, removing the main twist while providing more consistency with the multi- jurisdictional setup they wanted to achieve.”
For context: the previous model gave Justin Sun’s company greater operational control, including access to backup cold storage of collateral BTC for the WBTC.
Many users, including Meow, raised concerns about Sun’s access to backups of its cold storage collateral assets.
What has changed in the new WBTC custody model?
For perspective, the current model has one location in the US and all three main keys in the US. It also includes 2 of the 3 multi-sig wallets with cold storage.
The initially infamous proposed model with BiT Global involved three jurisdictions and two institutions. The master keys are said to be in the US, Hong Kong and Singapore.
However, for a multi-sig wallet with cold storage, Sun’s BiT Global had to manage two keys, while BitGo only had to secure one key.
The revised model will take place at three locations and three institutions. The companies are BitGo Inc., BitGo Singapore and BiT Global. Each company controls each key for 2 of the 3 multi-sig cold storage wallets. Furthermore, the master keys will be located in the US, Hong Kong and Singapore.
With the new setup, BitGo will still have more control over cold storage access to WBTC collateral assets. This effectively addresses the key risk issues raised.
Nevertheless, the WBTC custody saga has prompted more players to jump into the packaged BTC space, with Coinbase disclosure its cbBTC.
According to Arthur Cheongfounder of crypto VC DeFiance Capital, more packaged BTC products will hit the market in the next 6-12 months.
“Over the next six to twelve months, I think we’ll see at least $20 billion in TVL coming from various forms of the packaged/bridged BTC-to-DeFi ecosystem, the best known of which are Coinbase’s cbBTC and Thresold Network’s tBTC.”