Coinbase Smart Wallet Hits 1 Million Accounts With Passkey Adoption
The Coinbase Smart Wallet has reached a major milestone, surpassing 1 million accounts. On August 16, 2025, the platform saw a surge of 270,000 new accounts in a single day, a growth driven by the adoption of passkey authentication on the Base network. This authentication method simplifies user onboarding by replacing complex seed phrases with biometric verification, reducing friction for new users. Base is leading the adoption of the ERC-4337 standard on Layer 2 networks, which enables features like gasless transactions and social recovery.
The ERC-4337 standard operates through six key components: UserOperations, Bundlers, the EntryPoint contract, Paymasters, Senders, and Aggregators. Bundlers collect and submit transactions to the EntryPoint contract, which verifies signatures and ensures sufficient funds. Paymasters handle gas payments, allowing users to pay with ERC-20 tokens like USDC or USDT instead of native assets. This eliminates the need for users to hold ETH before interacting with the blockchain.
Developers have various wallet options, including embedded wallets that support email or social account logins. Para, a key player in this space, uses distributed multi-party computation (MPC) to ensure private keys never exist in full and supports over 15 million wallets. Coinbase CDP, Alchemy, and Fireblocks also provide infrastructure solutions, with Fireblocks expanding its lineup through an acquisition in late 2025. Circle offers embedded wallet infrastructure with native USDC support, while Phantom provides SDKs for multiple environments.
Security and regulatory considerations are critical in wallet design. FinCEN distinguishes between value transmitters and software providers, while OFAC requires sanctions screening for products involving US persons. Coinbase incurred $355 million in incident costs in 2025 due to a security breach involving outsourced support agents in India. The breach highlighted the risks of centralized sequencers and the potential concentration of bundler power in the ERC-4337 ecosystem.