diff --git a/modules/passkey-crypto/CHANGELOG.md b/modules/passkey-crypto/CHANGELOG.md
index 915a67a74e..64d9522198 100644
--- a/modules/passkey-crypto/CHANGELOG.md
+++ b/modules/passkey-crypto/CHANGELOG.md
@@ -5,8 +5,7 @@ See [Conventional Commits](https://conventionalcommits.org) for commit guideline
 
 # 0.2.0 (2026-05-05)
 
-
 ### Features
 
-* **passkey-crypto:** add @bitgo/passkey-crypto package ([727a8e1](https://github.com/BitGo/BitGoJS/commit/727a8e156bd5cdea72fa0d2820410d75c8663ba2))
-* **passkey-crypto:** extend package with PRF helpers and WebAuthn types ([942bd84](https://github.com/BitGo/BitGoJS/commit/942bd8444bb1b9b726f2e344ce9ddc0fbe718fbf))
+- **passkey-crypto:** add @bitgo/passkey-crypto package ([727a8e1](https://github.com/BitGo/BitGoJS/commit/727a8e156bd5cdea72fa0d2820410d75c8663ba2))
+- **passkey-crypto:** extend package with PRF helpers and WebAuthn types ([942bd84](https://github.com/BitGo/BitGoJS/commit/942bd8444bb1b9b726f2e344ce9ddc0fbe718fbf))
diff --git a/modules/passkey-crypto/package.json b/modules/passkey-crypto/package.json
index 1fb57c0c37..26d5d56657 100644
--- a/modules/passkey-crypto/package.json
+++ b/modules/passkey-crypto/package.json
@@ -1,6 +1,6 @@
 {
   "name": "@bitgo/passkey-crypto",
-  "version": "0.2.0",
+  "version": "0.3.0",
   "description": "Pure cryptographic primitives for BitGo passkey (WebAuthn PRF) key derivation",
   "main": "./dist/src/index.js",
   "types": "./dist/src/index.d.ts",
@@ -39,6 +39,7 @@
     "@bitgo/sdk-core": "^36.44.0"
   },
   "devDependencies": {
+    "@bitgo/sdk-api": "^1.79.2",
     "@types/node": "^18.0.0",
     "sjcl": "1.0.1"
   }
diff --git a/modules/passkey-crypto/src/attachPasskeyToWallet.ts b/modules/passkey-crypto/src/attachPasskeyToWallet.ts
index 575828f7b9..0366ea7492 100644
--- a/modules/passkey-crypto/src/attachPasskeyToWallet.ts
+++ b/modules/passkey-crypto/src/attachPasskeyToWallet.ts
@@ -41,7 +41,7 @@ export async function attachPasskeyToWallet(params: {
   const enterpriseSalt = deriveEnterpriseSalt(device.prfSalt, enterpriseId);
 
   // Decrypt private key with existing passphrase
-  const privateKey = bitgo.decrypt({ password: existingPassphrase, input: keychain.encryptedPrv });
+  const privateKey = await bitgo.decryptAsync({ password: existingPassphrase, input: keychain.encryptedPrv });
 
   // Decode credentialId from base64url to ArrayBuffer for allowCredentials.
   // The WebAuthn spec requires allowCredentials to be non-empty when using evalByCredential,
@@ -62,7 +62,11 @@ export async function attachPasskeyToWallet(params: {
 
   // Derive password from PRF output and re-encrypt
   const prfPassword = derivePassword(authResult.prfResult);
-  const encryptedPrv = bitgo.encrypt({ password: prfPassword, input: privateKey });
+  const encryptedPrv = await bitgo.encryptAsync({
+    password: prfPassword,
+    input: privateKey,
+    encryptionVersion: 2,
+  });
 
   // Convert enterpriseSalt from hex to base64url (URL-safe, no padding)
   // as required by the server's prfSalt validation.
diff --git a/modules/passkey-crypto/src/derivePassword.ts b/modules/passkey-crypto/src/derivePassword.ts
index 6865811af5..862fb023dd 100644
--- a/modules/passkey-crypto/src/derivePassword.ts
+++ b/modules/passkey-crypto/src/derivePassword.ts
@@ -1,8 +1,9 @@
 /**
  * Derives a wallet passphrase from a WebAuthn PRF result.
  *
- * The PRF output (ArrayBuffer) is hex-encoded and used directly as the
- * walletPassphrase for SJCL-based encryption (bitgo.encrypt).
+ * The PRF output (ArrayBuffer) is hex-encoded and used directly as the password
+ * passed into Argon2id v2 encryption (`bitgo.encryptAsync` with
+ * `encryptionVersion: 2`) and the auto-detecting `bitgo.decryptAsync` path.
  *
  * @param prfResult - Raw PRF output from WebAuthn credential assertion
  * @returns Lowercase hex string to use as walletPassphrase
diff --git a/modules/passkey-crypto/src/removePasskeyFromWallet.ts b/modules/passkey-crypto/src/removePasskeyFromWallet.ts
index ec8222b449..831057d9ec 100644
--- a/modules/passkey-crypto/src/removePasskeyFromWallet.ts
+++ b/modules/passkey-crypto/src/removePasskeyFromWallet.ts
@@ -1,4 +1,4 @@
-import { BitGoBase, decryptKeychainPrivateKey } from '@bitgo/sdk-core';
+import { BitGoBase, decryptKeychainPrivateKeyAsync } from '@bitgo/sdk-core';
 import { WebAuthnOtpDevice } from './webAuthnTypes';
 
 export async function removePasskeyFromWallet(params: {
@@ -20,7 +20,7 @@ export async function removePasskeyFromWallet(params: {
   const keychain = await baseCoin.keychains().get({ id: keychainId });
 
   // Verify passphrase before any mutation
-  const decrypted = decryptKeychainPrivateKey(bitgo, keychain, walletPassphrase);
+  const decrypted = await decryptKeychainPrivateKeyAsync(bitgo, keychain, walletPassphrase);
   if (!decrypted) {
     throw new Error('Incorrect wallet passphrase. Passkey removal aborted to prevent lockout.');
   }
diff --git a/modules/passkey-crypto/test/integration/helpers/mockBitGo.ts b/modules/passkey-crypto/test/integration/helpers/mockBitGo.ts
index 4e6a9d4564..4c47ab7f90 100644
--- a/modules/passkey-crypto/test/integration/helpers/mockBitGo.ts
+++ b/modules/passkey-crypto/test/integration/helpers/mockBitGo.ts
@@ -1,4 +1,5 @@
 import * as sinon from 'sinon';
+import { decryptV2, encryptV2 } from '@bitgo/sdk-api';
 import {
   ASSERTION_CHALLENGE,
   BASE_SALT,
@@ -20,6 +21,33 @@ function realDecrypt({ password, input }: { password: string; input: string }):
   return sjcl.decrypt(password, typeof input === 'string' ? JSON.parse(input) : input);
 }
 
+async function mockEncryptAsync(params: {
+  password: string;
+  input: string;
+  encryptionVersion?: number;
+}): Promise<string> {
+  if (params.encryptionVersion === 2) {
+    return encryptV2(params.password, params.input);
+  }
+  return realEncrypt(params);
+}
+
+async function mockDecryptAsync(params: { password: string; input: string }): Promise<string> {
+  let envelopeVersion: number | undefined;
+  try {
+    envelopeVersion = JSON.parse(params.input).v;
+  } catch {
+    throw new Error('decrypt: ciphertext is not valid JSON');
+  }
+  if (envelopeVersion === 2) {
+    return decryptV2(params.password, params.input);
+  }
+  if (envelopeVersion !== undefined && envelopeVersion !== 1) {
+    throw new Error(`decrypt: unknown envelope version ${envelopeVersion}`);
+  }
+  return realDecrypt(params);
+}
+
 export interface KeychainState {
   id: string;
   encryptedPrv: string;
@@ -81,6 +109,8 @@ export function makeMockBitGo(initialEncryptedPrv: string): MockBitGo {
 
     encrypt: (params: { password: string; input: string }) => realEncrypt(params),
     decrypt: (params: { password: string; input: string }) => realDecrypt(params),
+    encryptAsync: mockEncryptAsync,
+    decryptAsync: mockDecryptAsync,
 
     get: sinon.stub().callsFake((url: string) => {
       if (url.includes('/user/otp/webauthn/register')) {
diff --git a/modules/passkey-crypto/test/integration/passkeyLifecycle.test.ts b/modules/passkey-crypto/test/integration/passkeyLifecycle.test.ts
index 5a6fb41aff..5db2ec9102 100644
--- a/modules/passkey-crypto/test/integration/passkeyLifecycle.test.ts
+++ b/modules/passkey-crypto/test/integration/passkeyLifecycle.test.ts
@@ -1,4 +1,5 @@
 import * as assert from 'assert';
+import { decryptV2, encryptV2 } from '@bitgo/sdk-api';
 import { derivePassword } from '../../src/derivePassword';
 import { deriveEnterpriseSalt } from '../../src/deriveEnterpriseSalt';
 import { registerPasskey } from '../../src/registerPasskey';
@@ -23,7 +24,6 @@ import {
 // Use sjcl directly for round-trip encryption tests — same crypto as mockBitGo
 const sjcl = require('sjcl');
 const sjclEncrypt = (password: string, input: string) => JSON.stringify(sjcl.encrypt(password, input));
-const sjclDecrypt = (password: string, input: string) => sjcl.decrypt(password, JSON.parse(input));
 
 describe('passkey-crypto integration', function () {
   let initialEncryptedPrv: string;
@@ -52,8 +52,10 @@ describe('passkey-crypto integration', function () {
         provider,
       });
 
-      // Verify encryptedPrv round-trips with the PRF-derived password
-      const decrypted = sjclDecrypt(derivePassword(PRF_OUTPUT), keychainState.encryptedPrv);
+      assert.strictEqual(JSON.parse(keychainState.encryptedPrv).v, 2);
+
+      // Verify encryptedPrv round-trips with the PRF-derived password (Argon2id v2 envelope)
+      const decrypted = await decryptV2(derivePassword(PRF_OUTPUT), keychainState.encryptedPrv);
       assert.strictEqual(decrypted, PRIVATE_KEY);
 
       // prfSalt stored in webauthnInfo must be valid base64url
@@ -81,7 +83,7 @@ describe('passkey-crypto integration', function () {
 
       // Same passphrase as what attach used — decrypts the stored key
       assert.strictEqual(derivedPassphrase, derivePassword(PRF_OUTPUT));
-      assert.strictEqual(sjclDecrypt(derivedPassphrase, keychainState.encryptedPrv), PRIVATE_KEY);
+      assert.strictEqual(await decryptV2(derivedPassphrase, keychainState.encryptedPrv), PRIVATE_KEY);
     });
   });
 
@@ -137,7 +139,7 @@ describe('passkey-crypto integration', function () {
       const { bitgo } = makeMockBitGo(initialEncryptedPrv);
       const device = { id: DEVICE_MONGO_ID, credentialId: CREDENTIAL_ID, prfSalt: BASE_SALT, isPasskey: true };
 
-      // Uses real sjcl decrypt — wrong passphrase genuinely fails decryptKeychainPrivateKey
+      // Uses real sjcl decrypt — wrong passphrase genuinely fails decryptKeychainPrivateKeyAsync
       await assert.rejects(
         () =>
           removePasskeyFromWallet({
@@ -152,5 +154,35 @@ describe('passkey-crypto integration', function () {
 
       assert.strictEqual(bitgo.del.callCount, 0);
     });
+
+    it('removePasskeyFromWallet accepts correct passphrase and rejects wrong when encryptedPrv is v2', async function () {
+      const v2Passphrase = 'v2-removal-passphrase';
+      const v2EncryptedPrv = await encryptV2(v2Passphrase, PRIVATE_KEY);
+      const { bitgo } = makeMockBitGo(v2EncryptedPrv);
+      const device = { id: DEVICE_MONGO_ID, credentialId: CREDENTIAL_ID, prfSalt: BASE_SALT, isPasskey: true };
+
+      await removePasskeyFromWallet({
+        bitgo,
+        coin: COIN,
+        walletId: WALLET_ID,
+        device,
+        walletPassphrase: v2Passphrase,
+      });
+      assert.strictEqual(bitgo.del.callCount, 1);
+
+      const { bitgo: bitgoWrong } = makeMockBitGo(v2EncryptedPrv);
+      await assert.rejects(
+        () =>
+          removePasskeyFromWallet({
+            bitgo: bitgoWrong,
+            coin: COIN,
+            walletId: WALLET_ID,
+            device,
+            walletPassphrase: 'wrong-passphrase',
+          }),
+        /Incorrect wallet passphrase/
+      );
+      assert.strictEqual(bitgoWrong.del.callCount, 0);
+    });
   });
 });
diff --git a/modules/passkey-crypto/test/unit/attachPasskeyToWallet.test.ts b/modules/passkey-crypto/test/unit/attachPasskeyToWallet.test.ts
index 222515cfaa..4cc367a86a 100644
--- a/modules/passkey-crypto/test/unit/attachPasskeyToWallet.test.ts
+++ b/modules/passkey-crypto/test/unit/attachPasskeyToWallet.test.ts
@@ -1,5 +1,6 @@
 import * as assert from 'assert';
 import * as sinon from 'sinon';
+import { decryptV2, encryptV2 } from '@bitgo/sdk-api';
 import { attachPasskeyToWallet } from '../../src/attachPasskeyToWallet';
 import { WebAuthnOtpDevice, PasskeyAuthResult, WebAuthnProvider } from '../../src/webAuthnTypes';
 
@@ -53,8 +54,8 @@ describe('attachPasskeyToWallet', function () {
     url: sinon.SinonStub;
     coin: sinon.SinonStub;
     put: sinon.SinonStub;
-    decrypt: sinon.SinonStub;
-    encrypt: sinon.SinonStub;
+    decryptAsync: sinon.SinonStub;
+    encryptAsync: sinon.SinonStub;
   };
 
   let mockProvider: {
@@ -83,8 +84,8 @@ describe('attachPasskeyToWallet', function () {
         .callsFake((path, version) => `/api/v${version ?? 1}${path}`),
       coin: sinon.stub().returns(mockBaseCoin),
       put: sinon.stub(),
-      decrypt: sinon.stub(),
-      encrypt: sinon.stub(),
+      decryptAsync: sinon.stub(),
+      encryptAsync: sinon.stub(),
     };
 
     mockProvider = {
@@ -92,8 +93,8 @@ describe('attachPasskeyToWallet', function () {
       get: sinon.stub(),
     };
 
-    mockBitGo.decrypt.returns(decryptedPrv);
-    mockBitGo.encrypt.returns(reEncryptedPrv);
+    mockBitGo.decryptAsync.resolves(decryptedPrv);
+    mockBitGo.encryptAsync.resolves(reEncryptedPrv);
 
     const putSendStub = sinon.stub().returns({ result: sinon.stub().resolves(updatedKeychain) });
     mockBitGo.put.returns({ send: putSendStub });
@@ -124,8 +125,8 @@ describe('attachPasskeyToWallet', function () {
     sinon.assert.calledWith(mockWallets.get, { id: walletId });
     sinon.assert.calledOnce(mockWallet.type);
     sinon.assert.calledOnce(mockWallet.getEncryptedUserKeychain);
-    sinon.assert.calledOnce(mockBitGo.decrypt);
-    sinon.assert.calledWithExactly(mockBitGo.decrypt, { password: existingPassphrase, input: encryptedPrv });
+    sinon.assert.calledOnce(mockBitGo.decryptAsync);
+    sinon.assert.calledWithExactly(mockBitGo.decryptAsync, { password: existingPassphrase, input: encryptedPrv });
 
     // provider.get called with evalByCredential keyed on device.credentialId
     sinon.assert.calledOnce(mockProvider.get);
@@ -139,6 +140,13 @@ describe('attachPasskeyToWallet', function () {
     assert.strictEqual(getArgs.publicKey.allowCredentials[0].type, 'public-key');
     assert.ok(getArgs.publicKey.allowCredentials[0].id instanceof ArrayBuffer);
 
+    sinon.assert.calledOnce(mockBitGo.encryptAsync);
+    sinon.assert.calledWithExactly(mockBitGo.encryptAsync, {
+      password: '1e5cb478',
+      input: decryptedPrv,
+      encryptionVersion: 2,
+    });
+
     // PUT called with correct shape
     sinon.assert.calledOnce(mockBitGo.put);
     sinon.assert.calledWith(mockBitGo.put, `/api/v2/${coin}/key/${keychainId}`);
@@ -223,7 +231,7 @@ describe('attachPasskeyToWallet', function () {
   });
 
   it('should propagate decrypt errors', async function () {
-    mockBitGo.decrypt.throws(new Error('decryption failed'));
+    mockBitGo.decryptAsync.rejects(new Error('decryption failed'));
 
     await assert.rejects(
       () => callAttach(),
@@ -236,6 +244,18 @@ describe('attachPasskeyToWallet', function () {
     sinon.assert.notCalled(mockBitGo.put);
   });
 
+  it('should succeed when keychain encryptedPrv is already a v2 envelope', async function () {
+    const v2Input = await encryptV2(existingPassphrase, decryptedPrv);
+    mockWallet.getEncryptedUserKeychain.resolves({ id: keychainId, encryptedPrv: v2Input });
+    mockBitGo.decryptAsync.callsFake(async (p: { password: string; input: string }) => decryptV2(p.password, p.input));
+
+    const result = await callAttach();
+
+    sinon.assert.calledOnce(mockBitGo.decryptAsync);
+    sinon.assert.calledWithExactly(mockBitGo.decryptAsync, { password: existingPassphrase, input: v2Input });
+    assert.strictEqual(result.id, keychainId);
+  });
+
   it('should use device.credentialId as the key in evalByCredential', async function () {
     await callAttach();
 
diff --git a/modules/passkey-crypto/test/unit/removePasskeyFromWallet.test.ts b/modules/passkey-crypto/test/unit/removePasskeyFromWallet.test.ts
index 5ea3a1a818..448218ee37 100644
--- a/modules/passkey-crypto/test/unit/removePasskeyFromWallet.test.ts
+++ b/modules/passkey-crypto/test/unit/removePasskeyFromWallet.test.ts
@@ -1,5 +1,6 @@
 import * as assert from 'assert';
 import * as sinon from 'sinon';
+import { decryptV2, encryptV2 } from '@bitgo/sdk-api';
 import { removePasskeyFromWallet } from '../../src';
 
 describe('removePasskeyFromWallet', function () {
@@ -39,7 +40,7 @@ describe('removePasskeyFromWallet', function () {
         wallets: sinon.stub().returns(mockWallets),
         keychains: sinon.stub().returns(mockKeychains),
       }),
-      decrypt: sinon.stub().returns('xprv-decrypted'),
+      decryptAsync: sinon.stub().resolves('xprv-decrypted'),
       del: sinon.stub().returns({
         result: sinon.stub().resolves({}),
       }),
@@ -75,7 +76,51 @@ describe('removePasskeyFromWallet', function () {
   });
 
   it('should throw and not call DELETE if passphrase is wrong', async function () {
-    mockBitGo.decrypt = sinon.stub().throws(new Error('decryption failed'));
+    mockBitGo.decryptAsync = sinon.stub().rejects(new Error('decryption failed'));
+
+    await assert.rejects(
+      () =>
+        removePasskeyFromWallet({
+          bitgo: mockBitGo,
+          coin: coinName,
+          walletId,
+          device,
+          walletPassphrase: 'wrong-passphrase',
+        }),
+      (err: Error) => {
+        assert.ok(err.message.includes('Incorrect wallet passphrase'));
+        return true;
+      }
+    );
+
+    sinon.assert.notCalled(mockBitGo.del);
+  });
+
+  it('should verify v2 encryptedPrv then remove device', async function () {
+    const v2Passphrase = 'unit-v2-wallet-pass';
+    const v2Blob = await encryptV2(v2Passphrase, 'xprv-decrypted');
+    mockKeychains.get = sinon.stub().resolves({ id: keychainId, encryptedPrv: v2Blob });
+    mockBitGo.decryptAsync = sinon
+      .stub()
+      .callsFake(async (p: { password: string; input: string }) => decryptV2(p.password, p.input));
+
+    await removePasskeyFromWallet({
+      bitgo: mockBitGo,
+      coin: coinName,
+      walletId,
+      device,
+      walletPassphrase: v2Passphrase,
+    });
+
+    sinon.assert.calledOnce(mockBitGo.del);
+  });
+
+  it('should throw and not call DELETE when v2 encryptedPrv and passphrase is wrong', async function () {
+    const v2Blob = await encryptV2('correct-v2-pass', 'xprv-decrypted');
+    mockKeychains.get = sinon.stub().resolves({ id: keychainId, encryptedPrv: v2Blob });
+    mockBitGo.decryptAsync = sinon
+      .stub()
+      .callsFake(async (p: { password: string; input: string }) => decryptV2(p.password, p.input));
 
     await assert.rejects(
       () =>
diff --git a/yarn.lock b/yarn.lock
index 3004a71efe..8bccb99fe8 100644
--- a/yarn.lock
+++ b/yarn.lock
@@ -18953,7 +18953,7 @@ sisteransi@^1.0.5:
   resolved "https://registry.npmjs.org/sisteransi/-/sisteransi-1.0.5.tgz"
   integrity sha512-bLGGlR1QxBcynn2d5YmDX4MGjlZvy2MRBDRNHLJ8VI6l6+9FUiyTFNJ0IveOSP0bcXgVDPRcfGqA0pjaqUpfVg==
 
-sjcl@^1.0.6, "sjcl@npm:@bitgo/sjcl@1.0.1":
+sjcl@1.0.1, sjcl@^1.0.6, "sjcl@npm:@bitgo/sjcl@1.0.1":
   version "1.0.1"
   resolved "https://registry.npmjs.org/@bitgo/sjcl/-/sjcl-1.0.1.tgz#633fa84608c1cb7461b17ceb6131d96722921fd3"
   integrity sha512-dBICMzShC8gXdpSj9cvl4wl9Jkt4h14wt4XQ+/6V6qcC2IObyKRJfaG5TYUU6RvVknhPBPyBx9v84vNKODM5fQ==