Breez and Turnkey jointly launch an unmanaged Bitcoin wallet for backend applications

Breez has partnered with Turnkey to launch an unmanaged Bitcoin wallet for backend applications

Breez, a financial technology company known for its Bitcoin payment tool, announced a partnership with Turnkey, a wallet infrastructure solution provider. The collaboration allows application developers to integrate unmanaged Bitcoin wallets into applications running on centralized backend servers, a model widely adopted by large consumer applications.

Solving the hosting risks of back-end running apps

Many mainstream apps managed millions of users through centralized servers. In the past, if these companies wanted to provide Bitcoin services, they had to hold the user's private key. This structure allows these companies to become custodians, imposing regulatory responsibilities, licensing requirements and the burden of ensuring the safety of large numbers of user funds.

The alternative to centralized hosting is device-based wallets, but integrating such solutions often requires rebuilding the back-end infrastructure, which poses challenges for scalability and user experience.

With this new approach, each user gets a unique wallet with encryption keys generated and protected within Turnkey's isolated security zone. Both Breez and Turnkey stated that neither the application server, Breez nor Turnkey had access to these private keys.

The application backend retains only one certificate that restricts its operating rights, while the user has the only right to transfer funds. This architecture allows applications running on the back end to introduce unmanaged Bitcoin functionality on a large scale without having to assume custody responsibilities or restructure the core architecture.

Small Dictionary: A secure quarantine zone is a hardware-based security mechanism that isolates encryption keys and ensures that unauthorized software or systems cannot access them. Safe isolation areas provide an additional layer of protection for sensitive operations.

How the passkey-based approval process works

This solution leverages the passkey authentication process. Each user creates a digital credential (such as a pass key) associated with Turnkey when registering. When a transaction is initiated, the server aggregates the relevant details-amount, fee, and payee-and presents them to the user for approval.

The transaction will proceed only if the user authorizes it using their passkey. Servers cannot access or transfer funds independently, and users do not have to deal with mnemonics or complicate the experience. The familiar application flow on the user side remains unchanged.

Turnkey's infrastructure has been used by multiple consumer finance applications and has received a SOC2 security compliance audit. Breez sees the update as a step forward for exchanges, fintech companies and digital banks that want to provide Bitcoin and stablecoin services without having to deal with asset custody challenges.

Solution comparison

Centralized key storage: Hosted type, simple user experience but the company bears risks, high scalability but great regulatory challenges.

Device-side wallet: Unmanaged, user-managed keys and recovery, low scalability and difficult to expand to server-based applications.

Breez and Turnkey models: Unmanaged, no mnemonic words, unchanged application workflow, high scalability, suitable for back-end applications.

Extend unmanaged services to financial technology companies and digital banking

By integrating Turnkey, Breez leverages Spark, the open source network underlying its SDK, to enable backend servers to manage millions of wallets without having to store private keys. Breez's range of features, such as passkey login, stable balances (which helps cope with price fluctuations), and support for USDT and USDC stablecoins, have lowered the threshold for consumer applications to adopt Bitcoin.

Breez emphasized that exchanges can now automate bitcoin payments based on custom security policies, while fintech platforms can embed unmanaged bitcoin services into their existing interfaces. Eventually, a non-custodial model was formed, in which users maintained control of all funds.

This latest release builds on the Breez SDK's continued simplification of Bitcoin integration and is designed to serve mainstream platforms that rely on centralized management. Combined with new authentication methods and stablecoin support, Breez and Turnkey hope to provide a toolkit to bring decentralized assets such as Bitcoin and stablecoin to a wider audience without sacrificing user control.

Breez described the partnership as a breakthrough for exchanges, fintech companies and digital banks, allowing them to provide Bitcoin and stablecoin services to a large number of users while avoiding becoming a custodian and taking the associated risks.