1. Chainlink proof of reserve introduction in 21BTC
2. Community reaction on BTC security
3. Expert comments and regulatory measures

21.co, the parent company of cryptocurrency asset manager 21Shares, announced that it is adding Chainlink proof of reserve to 21BTC to address concerns about the Bitcoin (BTC) wrapper’s backing.

Chainlink proof of reserve introduction in 21BTC

Integrating proof of reserve into 21BTC on Ethereum and Solana protects against malicious minting by embedding cryptographic guarantees that new tokens minted are backed by reserves. Chainlink proof of reserve automatically audits financial data, including offchain reserve balances, and transmits that information to a blockchain-based smart contract in real-time.

Community reaction on BTC security

The announcement follows a wave of skepticism among cryptocurrency retail investors about the safety of the underlying spot BTC backing Bitcoin wrappers, such as Wrapped Bitcoin (WBTC) and Coinbase Wrapped BTC (cbBTC). This step is to address the concerns regarding the safety of their backing. On August 9, BitGo, the cryptocurrency custodian holding WBTC’s Bitcoin backing, agreed to grant partial control of the multisignature wallet holding the custodied Bitcoin to BiT Global, a Hong Kong-based exchange.

Expert comments and regulatory measures

This decision has proven controversial due to the involvement of Justin Sun, raising concerns within the ecosystem. Sky, previously known as Maker, opted to drop WBTC from its platform, while Coinbase launched cbBTC, which quickly gained popularity, becoming the third-largest wrapped BTC token. In the US, regulated custodians and ETF sponsors, such as Coinbase and BlackRock, are subject to strict oversight and reporting requirements, including regular third-party audits.

Adding Chainlink proof of reserve to 21BTC aims to enhance the security and transparency of crypto assets, a significant step given the growing concerns over the safety of wrapped BTC tokens.