The largest crypto exchange in the US by trading volume, Coinbase, announced on Wednesday, July 12, an upgrade on its digital wallet. The Coinbase team introduced an encrypted messaging feature on the wallet to facilitate users communication.
The report revealed that Coinbase teamed up with XMTP to launch the messaging feature in the self-custody wallet. At the primary development of the messaging feature, the project team leverages Coinbase open source Web3 platform to ease communication.
Coinbase Partners with XMTP
In a July 12 press release, the Coinbase team introduced a unique method for people to interact with crypto assets. The crypto exchange anticipates releasing the messaging feature to small groups before going public.
The messaging feature will also utilize the XMTP network, which is crucial in supporting Ethereum addresses. It was observed that at the development stages of the messaging feature, the developers leveraged the Ethereum Name Service (ENS) technology to improve the readability of the new product.
Previously, the Coinbase team partnered with the ENS team to develop self-custodial wallets. The crypto exchange and ENS team integrated a personalized wallet element backed by the Coinbase decentralized ID (cb. id). Unlike other ENS-based wallets, which charge for the label, the wallet labels on Coinbase are provided at zero cost.
In addition, the messaging feature aims to provide the user with complete data control. The Coinbase team admitted that the messaging tool has leveraged XMTP technology, including Lenster, to enable users to transfer data to other applications.
In an interview with the XMTP, chief executive Matt Galligan explained the feature of the end user inbox tool. The CEO mentioned that the inbox feature was portable and interoperable with other supporting applications. This will allow the end user to use an application of their preference.
Features of Coinbase Encrypted Messaging Tool
Coinbase director of product management, Coelho-Prabhu, announced that users could access the wallet in around 100 countries. The director mentioned that the Coinbase wallet had minimized delays in transactions. Unlike banks or wire transfers, where users must wait for days, the Coinbase wallet reduces transaction delays.
The director added that the messaging feature on the wallet will enable the user to connect with other traders holding a similar digital asset quickly. He believes that the messaging to will support building strong connections between traders.
In his report, Prabhu confirmed that the investors of nonfungible tokens (NFTs) could purchase the asset directly by contacting the holder through the messaging feature.
The new messaging feature will support “thousand of digital coins,” and the USDC holders will not pay any gas fee. The wallet messaging tool will enable Coinbase users to make crypto payments similar to services provided by PayPal, Block Cash App, and Venmo. Similarly, the encrypted messaging feature mirrors the services on Telegram and Signal.
According to Galligan, the crypto exchange and XMTP’s latest development replicate Coinbase’s recent Ethereum layer-2 scaling network upgrade. A few months ago, the Coinbase team leveraged the existing technologies that support Web3 to strengthen its layer 2 scaling network Base and Optimism.
The CEO expressed optimism that the collaboration with XTMP demonstrated Coinbase’s unwavering commitment to building projects in protocols and decentralized networks. He applauded the efforts done by the crypto exchange in supporting other ecosystems through strategic partnership.
Efforts Made By Coinbase to Improve its Self-Custody Wallet
In 2017 the crypto exchange rolled out a mobile application of a self-custody wallet. Following the successful launch of the wallet, the crypto exchange has heavily invested in improving the functionality of the wallet.
At the beginning of this year, the crypto exchange launched a transaction preview feature on the wallet to address smart contract attacks.
Beyond this, the XMTP network provides a platform for announcements and alerts, which other applications can utilize. In 2021 the XMTP group generated $5 million in a seed funding round led by Offline Venture, a venture capital firm.
Last month the US market regulators Securities and Exchange Commission (SEC) scrutinized Coinbase wallet to examine whether the crypto exchange offering conforms with the regulation. The SEC observed that the unregistered broker Coinbase offered the crypto wallet services which was against the law. The SEC was against Coinbase’s offering, which allowed the third party to trade on behalf of the customers.
Commenting on the SEC charge, the Chief Legal Officer at Coinbase, Paul Grewal, confirmed that the crypto exchange will proceed with business as usual regardless of the charges.