From now on, to use Bitcoin for payments, shoppers will need a Coinbase account, as the Coinbase Commerce platform no longer supports Bitcoin payments from self-custody wallets or third-party exchanges.

As reported by Coinbase’s head of product, Lauren Dowling, in a Feb. 18 thread on X, the popular crypto exchange “made the difficult decision to remove native Bitcoin & other UTXO support” from Coinbase Commerce, due to difficulties in delivering recent updates on its EVM payment protocol for Bitcoin.

According to Dowling, delivering automatic cryptocurrency conversion capabilities on the Bitcoin blockchain without smart contracts and stablecoins was challenging. Therefore, the Coinbase Commerce team decided to list Bitcoin payments to those where a Coinbase account is involved.

Along with native Bitcoin stored in self-custody wallets or third-party exchanges, unspent transaction output (UTXO) coins were removed from direct use on Coinbase’s payment platform for merchants. The UTXO model is used by coins forked from Bitcoin, e.g. Dogecoin, Litecoin, Dash, or Bitcoin Cash.

At the same time, Coinbase CEO Brian Armstrong added that the company is in the process of integrating the Lightning Network into Coinbase. Potentially, the integration could facilitate Bitcoin-based commercial payments in the future.

At present, Armstrong claims that “the fastest checkout today on Commerce is with any ERC-20 on Layer 2 (Base, Polygon, etc). This includes Ethereum, USDC, wrapped Bitcoin, and thousands of ERC-20 tokens.” He also believes that paying with crypto is going to primarily happen on Layer 2 in the future.

“Zooming out – we think paying for stuff online with crypto won’t really go mainstream until we get off layer 1, and reduce transaction fees and confirmation times, so we’re trying to accelerate the move toward that world.”

Brian Armstrong, Coinbase CEO

Coinbase Commerce launched as an updated crypto payment experience, built on top of the crypto exchange’s new open source Onchain Payment Protocol, aiming to simplify and standardize onchain payments. In mid-2023, the platform partnered with the blockchain analytics platform Chainalysis to reduce the impact of traditional barriers and friction that are associated with fiat transactions and simplify participation in the DeFi ecosystem.