Starknet launches strkBTC to bring ZK-powered shielded bitcoin to its Layer 2 network

Starknet, an Ethereum Layer 2 network developed by StarkWare, has officially launched strkBTC, a new bitcoin-based asset designed to enable private balances and confidential transfers while maintaining full composability across decentralized finance applications.

Initially unveiled in February, the token uses Starknet's zero-knowledge cryptography to provide an advanced shielding mechanism that is compliance-ready, the team said in a statement shared with The Block. The asset functions as a shielded bitcoin (BTC) wrapper operating on Starknet rather than on the Bitcoin base layer itself.

Upon launch, strkBTC enables re-anonymization to bridge back to fresh, unlinked Bitcoin addresses, with compliance-ready auditability and asset screening, the team said. Future upgrades aim to bring confidential DeFi features such as shielded lending, trading, and yield on Starknet.

The shielding mechanism aims to address what the project describes as growing demand for privacy tools and rising threats against bitcoin holders identified through public blockchain data. Blockchain security firm CertiK recorded 34 verified incidents globally in 2026 through early May, a 41% increase from the same period in 2025, with AI tools reportedly aiding attackers to connect public wallet addresses to physical identities with up to 90% precision.

"When you have criminals monitoring the public ledger, using AI to trace wallets, and attacking people for their crypto, privacy is no longer just a lofty ideal," Starknet Foundation VP of Growth Damian Chen said. "Privacy is both a need as well as a right. We urgently need privacy solutions that close the drapes, meaning that the criminals can’t see through the window to plot against their targets."

"Bitcoin is the most sovereign money ever created, and also the least private money most people have ever used. For fifteen years, we told ourselves the public ledger was a feature. But in 2026, it has become a map into our private lives," Chen added. "We are launching strkBTC because the world has changed since 2008."

How strkBTC works

As a technical wrapper for bitcoin, strkBTC is designed to bridge bitcoin into a shielded environment on Starknet, allowing users and institutions to protect balances and transaction histories while still retaining compliance with audits, tax reporting, and legal requirements. Contributors described it as a tool that "prioritizes immediate utility over theoretical purity."

In contrast to older privacy protocols, strkBTC is built for regulatory disclosure where lawfully requested, the team explained. 

Viewing keys allow independent third-party compliance reviewers to disclose limited data to tax authorities, auditors, or other regulatory bodies upon lawful request, they said, with users also receiving a viewing key to unshield transactions for their own purposes.

Such "compliant transactions" unlock a range of use cases that were previously restricted from interacting with BTC, the project argued, including private payroll, commercially sensitive payments, and strategic capital deployment, aiming to make bitcoin usable as "private onchain cash."

Eli Ben-Sasson, CEO of Starknet developer StarkWare, described the launch as "private digital cash — the way it should be." Ben-Sasson was a co-founder of Zcash and argued that strkBTC represents a major advance in some of the ideas that propelled that project. "A strkBTC economy will allow users and institutions to shield balances, which is much needed for the sake of our rights, our safety, and to drive adoption too," he said.

strkBTC roadmap

The initiative also forms part of Starknet’s broader effort to activate bitcoin as a "productive" financial asset, expanding prior staking, yield, and BTCFi programs on the network.

The project's roadmap includes research into quantum-resistant cryptography for strkBTC, integration with BitVM to reduce trust assumptions through a 1-of-N security model, and a longer-term goal of a fully trustless bridge enabled by a potential OP_CAT soft fork allowing Bitcoin to natively verify Starknet proofs.