BitGo adjusts WBTC custody operations after outcry – What changed?

• BitGo has revised its WBTC custody operations model after risk concerns
• Meow, Jupiter Exchange’s founder, is ‘satisfied’ 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 is ‘satisfied’ with the changes.

“Following the space, they updated their plans to allow Bitgo Singapore to hold the backup key instead, which is a far less drastic change from the current setup, removes the most major contention, while being more cohesive with the multi-jurisdictional setup they wanted to achieve.”

For context, the previous model allowed Justin Sun’s firm more operational control, including access to back-up to cold storage of collateral BTC for the WBTC. 

Many users, including Meow, voiced concerns about Sun’s access to cold storage backup of the collateral assets.  

What changed in the new WBTC custody model?

For perspective, the current model has a single location in the USA and all 3 master keys within the U.S. It also includes 2 out of 3 cold-storage multi-sig wallets.  

The initial infamous proposed model with BiT Global involved three jurisdictions and two institutions. The master keys would be located in the U.S, Hong Kong, and Singapore. 

However, for a cold storage multi-sig wallet, Sun’s BiT Global was to control two keys, while BitGo was to secure only one key.  

The revised model will be across three locations and three institutions. The firms will be BitGo Inc., BitGo Singapore, and BiT Global. Each firm will control each key for 2 out of 3 multi-sig cold storage wallet. Additionally, the master keys will be located in the U.S, Hong Kong, and Singapore. 

With the new setup, BitGo will still have more control over cold-storage access to WBTC collateral assets. This will effectively address key risk concerns that were raised.  

Nevertheless, the WBTC custody saga has ignited more players to jump into the wrapped BTC space, with Coinbase unveiling its cbBTC. 

According to Arthur Cheong, founder of crypto VC DeFiance Capital, more wrapped BTC products will enter the space in the next 6-12 months. 

“Think we will see at least $20b of TVL coming from various forms of wrapped/bridged BTC to DeFi ecosystem in the next 6-12 months, with notable one being cbBTC from Coinbase and tBTC from Thresold Network.”