Starknet unveils strkBTC, shielded Bitcoin transactions on Ethereum Layer 2

Starknet (STRK), the Ethereum Layer 2 network developed by StarkWare, today announced strkBTC, a wrapped Bitcoin asset that introduces optional shielding while preserving full DeFi composability.

Starknet to roll out wrapped Bitcoin strkBTC

Starknet announced that it will launch its wrapped Bitcoin, strkBTC, providing optional shielding and confidential transfers, according to a Thursday announcement.

strkBTC represents the first wrapped asset on Starknet redeemable for native Bitcoin. Users can deposit BTC to receive strkBTC deterministically through verifiable on-chain processes, eliminating discretionary custodians. 

The asset enables Bitcoin holders to participate in Starknet’s DeFi ecosystem, including staking, lending, and yield opportunities, while optionally shielding transaction amounts and counterparties from public view.

“strkBTC is designed to be used, not just held. It enables Bitcoin to function as a settlement asset in DeFi, while preserving privacy around ownership and activity,” wrote Starknet.

A key innovation is the optional shielding capability: users can choose to hide transaction amounts, balances, and counterparty details from public view, addressing long-standing privacy limitations on transparent blockchain networks.

Privacy is implemented at the protocol level using Starknet’s zero-knowledge (zk) technology, allowing confidential DeFi interactions without isolating capital or compromising auditability. This addresses a core limitation of public blockchains, where transparent ledgers expose sensitive positions, trading strategies, and competitive information.

To receive and hold shielded strkBTC, users generate a viewing key that enables compliant disclosures. Viewing keys will be encrypted and registered with a third-party auditing entity.

“With private ownership and public execution, Bitcoin can finally function as a first-class asset in DeFi. Collateral can be posted without exposing balance sheets. Strategies can be executed without broadcasting intent. Settlement and payment workflows can operate without permanent public records of activity,” Starknet added.

strkBTC is slated to launch in the near term, with privacy functionalities expected to roll out and expand progressively.

STRK is down 5% despite the announcement, as the token continues its decline alongside the broader crypto market.