diff --git a/src/pegins.cpp b/src/pegins.cpp
new file mode 100644
index 0000000000..4c9bd9dcc4
--- /dev/null
+++ b/src/pegins.cpp
@@ -0,0 +1,354 @@
+// Copyright (c) 2017-2017 The Bitcoin Core developers
+// Distributed under the MIT software license, see the accompanying
+// file COPYING or http://www.opensource.org/licenses/mit-license.php.
+
+#include <pegins.h>
+
+#include <arith_uint256.h>
+#include <block_proof.h>
+#include <chainparams.h>
+#include <crypto/hmac_sha256.h>
+#include <consensus/consensus.h>
+#include <consensus/validation.h>
+#include <mainchainrpc.h>
+#include <pow.h>
+#include <primitives/transaction.h>
+#include <primitives/bitcoin/merkleblock.h>
+#include <secp256k1.h>
+#include <script/interpreter.h>
+#include <script/standard.h>
+#include <streams.h>
+#include <util.h>
+
+//
+// ELEMENTS
+//
+
+namespace {
+static secp256k1_context* secp256k1_ctx_validation;
+
+class Secp256k1Ctx
+{
+public:
+    Secp256k1Ctx() {
+        assert(secp256k1_ctx_validation == NULL);
+        secp256k1_ctx_validation = secp256k1_context_create(SECP256K1_CONTEXT_VERIFY | SECP256K1_CONTEXT_SIGN);
+        assert(secp256k1_ctx_validation != NULL);
+    }
+
+    ~Secp256k1Ctx() {
+        assert(secp256k1_ctx_validation != NULL);
+        secp256k1_context_destroy(secp256k1_ctx_validation);
+        secp256k1_ctx_validation = NULL;
+    }
+};
+static Secp256k1Ctx instance_of_secp256k1ctx;
+}
+
+bool GetAmountFromParentChainPegin(CAmount& amount, const Sidechain::Bitcoin::CTransaction& txBTC, unsigned int nOut)
+{
+    amount = txBTC.vout[nOut].nValue;
+    return true;
+}
+
+bool GetAmountFromParentChainPegin(CAmount& amount, const CTransaction& txBTC, unsigned int nOut)
+{
+    //if (!txBTC.vout[nOut].nValue.IsExplicit()) {
+    //    return false;
+    //}
+    //if (!txBTC.vout[nOut].nAsset.IsExplicit()) {
+    //    return false;
+    //}
+    //if (txBTC.vout[nOut].nAsset.GetAsset() != Params().GetConsensus().parent_pegged_asset) {
+    //    return false;
+    //}
+    //amount = txBTC.vout[nOut].nValue.GetAmount();
+    //TODO(rebase) reenable above for CA/CT
+    amount = txBTC.vout[nOut].nValue;
+    return true;
+}
+
+// Takes federation redeem script and adds HMAC_SHA256(pubkey, scriptPubKey) as a tweak to each pubkey
+CScript calculate_contract(const CScript& federationRedeemScript, const CScript& scriptPubKey) {
+    CScript scriptDestination;
+    txnouttype type;
+    std::vector<std::vector<unsigned char> > solutions;
+    // Sanity check fedRedeemScript
+    if (!Solver(federationRedeemScript, type, solutions) || (type != TX_MULTISIG && type != TX_TRUE)) {
+       assert(false);
+    }
+
+    {
+        CScript::const_iterator sdpc = federationRedeemScript.begin();
+        std::vector<unsigned char> vch;
+        opcodetype opcodeTmp;
+        while (federationRedeemScript.GetOp(sdpc, opcodeTmp, vch))
+        {
+            size_t pub_len = 33;
+            if (vch.size() == pub_len)
+            {
+                unsigned char tweak[32];
+                CHMAC_SHA256(vch.data(), pub_len).Write(scriptPubKey.data(), scriptPubKey.size()).Finalize(tweak);
+                int ret;
+                secp256k1_pubkey watchman;
+                secp256k1_pubkey tweaked;
+                ret = secp256k1_ec_pubkey_parse(secp256k1_ctx_validation, &watchman, vch.data(), pub_len);
+                assert(ret == 1);
+                ret = secp256k1_ec_pubkey_parse(secp256k1_ctx_validation, &tweaked, vch.data(), pub_len);
+                assert(ret == 1);
+                // If someone creates a tweak that makes this fail, they broke SHA256
+                ret = secp256k1_ec_pubkey_tweak_add(secp256k1_ctx_validation, &tweaked, tweak);
+                assert(ret == 1);
+                unsigned char new_pub[33];
+                ret = secp256k1_ec_pubkey_serialize(secp256k1_ctx_validation, new_pub, &pub_len, &tweaked, SECP256K1_EC_COMPRESSED);
+                assert(ret == 1);
+                assert(pub_len == 33);
+
+                // push tweaked pubkey
+                std::vector<unsigned char> pub_vec(new_pub, new_pub + pub_len);
+                scriptDestination << pub_vec;
+
+                // Sanity checks to reduce pegin risk. If the tweaked
+                // value flips a bit, we may lose pegin funds irretrievably.
+                // We take the tweak, derive its pubkey and check that
+                // `tweaked - watchman = tweak` to check the computation
+                // two different ways
+                secp256k1_pubkey tweaked2;
+                ret = secp256k1_ec_pubkey_create(secp256k1_ctx_validation, &tweaked2, tweak);
+                assert(ret);
+                ret = secp256k1_ec_pubkey_negate(secp256k1_ctx_validation, &watchman);
+                assert(ret);
+                secp256k1_pubkey* pubkey_combined[2];
+                pubkey_combined[0] = &watchman;
+                pubkey_combined[1] = &tweaked;
+                secp256k1_pubkey maybe_tweaked2;
+                ret = secp256k1_ec_pubkey_combine(secp256k1_ctx_validation, &maybe_tweaked2, pubkey_combined, 2);
+                assert(ret);
+                assert(!memcmp(&maybe_tweaked2, &tweaked2, 64));
+            } else {
+                // add to script untouched
+                if (vch.size() > 0) {
+                    scriptDestination << vch;
+                } else {
+                    scriptDestination << opcodeTmp;
+                }
+            }
+        }
+    }
+
+    return scriptDestination;
+}
+
+template<typename T>
+static bool CheckPeginTx(const std::vector<unsigned char>& tx_data, T& pegtx, const COutPoint& prevout, const CAmount claim_amount, const CScript& claim_script)
+{
+    try {
+        CDataStream pegtx_stream(tx_data, SER_NETWORK, PROTOCOL_VERSION);
+        pegtx_stream >> pegtx;
+        if (!pegtx_stream.empty()) {
+            return false;
+        }
+    } catch (std::exception& e) {
+        // Invalid encoding of transaction
+        return false;
+    }
+
+    // Check that transaction matches txid
+    if (pegtx->GetHash() != prevout.hash) {
+        return false;
+    }
+
+    if (prevout.n >= pegtx->vout.size()) {
+        return false;
+    }
+    CAmount amount = 0;
+    if (!GetAmountFromParentChainPegin(amount, *pegtx, prevout.n)) {
+        return false;
+    }
+    // Check the transaction nout/value matches
+    if (claim_amount != amount) {
+        return false;
+    }
+
+    // Check that the witness program matches the p2ch on the p2sh-p2wsh transaction output
+    CScript tweaked_fedpegscript = calculate_contract(Params().GetConsensus().fedpegScript, claim_script);
+    CScript witness_output(GetScriptForWitness(tweaked_fedpegscript));
+    CScript expected_script(CScript() << OP_HASH160 << ToByteVector(CScriptID(witness_output)) << OP_EQUAL);
+    if (pegtx->vout[prevout.n].scriptPubKey != expected_script) {
+        return false;
+    }
+
+    return true;
+}
+
+template<typename T>
+static bool GetBlockAndTxFromMerkleBlock(uint256& block_hash, uint256& tx_hash, T& merkle_block, const std::vector<unsigned char>& merkle_block_raw)
+{
+    try {
+        std::vector<uint256> tx_hashes;
+        std::vector<unsigned int> tx_indices;
+        CDataStream merkle_block_stream(merkle_block_raw, SER_NETWORK, PROTOCOL_VERSION);
+        merkle_block_stream >> merkle_block;
+        block_hash = merkle_block.header.GetHash();
+
+        if (!merkle_block_stream.empty()) {
+           return false;
+        }
+        if (merkle_block.txn.ExtractMatches(tx_hashes, tx_indices) != merkle_block.header.hashMerkleRoot || tx_hashes.size() != 1) {
+            return false;
+        }
+        tx_hash = tx_hashes[0];
+    } catch (std::exception& e) {
+        // Invalid encoding of merkle block
+        return false;
+    }
+    return true;
+}
+
+bool CheckParentProofOfWork(uint256 hash, unsigned int nBits, const Consensus::Params& params)
+{
+    bool fNegative;
+    bool fOverflow;
+    arith_uint256 bnTarget;
+
+    bnTarget.SetCompact(nBits, &fNegative, &fOverflow);
+
+    // Check range
+    if (fNegative || bnTarget == 0 || fOverflow || bnTarget > UintToArith256(params.parentChainPowLimit))
+        return false;
+
+    // Check proof of work matches claimed amount
+    if (UintToArith256(hash) > bnTarget)
+        return false;
+
+    return true;
+}
+
+bool IsValidPeginWitness(const CScriptWitness& pegin_witness, const COutPoint& prevout, bool check_depth) {
+    // 0) Return false if !consensus.has_parent_chain
+    if (!Params().GetConsensus().has_parent_chain) {
+        return false;
+    }
+
+    // Format on stack is as follows:
+    // 1) value - the value of the pegin output
+    // 2) asset type - the asset type being pegged in
+    // 3) genesis blockhash - genesis block of the parent chain
+    // 4) claim script - script to be evaluated for spend authorization
+    // 5) serialized transaction - serialized bitcoin transaction
+    // 6) txout proof - merkle proof connecting transaction to header
+    //
+    // First 4 values(plus prevout) are enough to validate a peg-in without any internal knowledge
+    // of Bitcoin serialization. This is useful for further abstraction by outsourcing
+    // the other validity checks to RPC calls.
+
+    const std::vector<std::vector<unsigned char> >& stack = pegin_witness.stack;
+    // Must include all elements
+    if (stack.size() != 6) {
+        return false;
+    }
+
+    CDataStream stream(stack[0], SER_NETWORK, PROTOCOL_VERSION);
+    CAmount value;
+    try {
+        stream >> value;
+    } catch (...) {
+        return false;
+    }
+
+    if (!MoneyRange(value)) {
+        return false;
+    }
+
+    // Get asset type
+    if (stack[1].size() != 32) {
+        return false;
+    }
+    //TODO(rebase) CA
+    //CAsset asset(stack[1]);
+
+    // Get genesis blockhash
+    if (stack[2].size() != 32) {
+        return false;
+    }
+    uint256 gen_hash(stack[2]);
+
+    // Get claim_script, sanity check size
+    CScript claim_script(stack[3].begin(), stack[3].end());
+    if (claim_script.size() > 100) {
+        return false;
+    }
+
+    uint256 block_hash;
+    uint256 tx_hash;
+    int num_txs;
+    // Get txout proof
+    if (Params().GetConsensus().ParentChainHasPow()) {
+        Sidechain::Bitcoin::CMerkleBlock merkle_block_pow;
+        if (!GetBlockAndTxFromMerkleBlock(block_hash, tx_hash, merkle_block_pow, stack[5])) {
+            return false;
+        }
+        if (!CheckParentProofOfWork(block_hash, merkle_block_pow.header.nBits, Params().GetConsensus())) {
+            return false;
+        }
+
+        Sidechain::Bitcoin::CTransactionRef pegtx;
+        if (!CheckPeginTx(stack[4], pegtx, prevout, value, claim_script)) {
+            return false;
+        }
+
+        num_txs = merkle_block_pow.txn.GetNumTransactions();
+    } else {
+        //TODO(rebase) parent signed blocks
+        //CMerkleBlock merkle_block;
+        //if (!GetBlockAndTxFromMerkleBlock(block_hash, tx_hash, merkle_block, stack[5])) {
+        //    return false;
+        //}
+
+        //if (!CheckProofSignedParent(merkle_block.header, Params().GetConsensus())) {
+        //    return false;
+        //}
+
+        //CTransactionRef pegtx;
+        //if (!CheckPeginTx(stack[4], pegtx, prevout, value, claim_script)) {
+        //    return false;
+        //}
+
+        //num_txs = merkle_block.txn.GetNumTransactions();
+    }
+
+    // Check that the merkle proof corresponds to the txid
+    if (prevout.hash != tx_hash) {
+        return false;
+    }
+
+    // Check the genesis block corresponds to a valid peg (only one for now)
+    if (gen_hash != Params().ParentGenesisBlockHash()) {
+        return false;
+    }
+
+    //TODO(rebase) CA
+    //// Check the asset type corresponds to a valid pegged asset (only one for now)
+    //if (asset != Params().GetConsensus().pegged_asset) {
+    //    return false;
+    //}
+
+    // Finally, validate peg-in via rpc call
+    if (check_depth && gArgs.GetBoolArg("-validatepegin", DEFAULT_VALIDATE_PEGIN)) {
+        if (!IsConfirmedBitcoinBlock(block_hash, Params().GetConsensus().pegin_min_depth, num_txs)) {
+            return false;
+        }
+    }
+    return true;
+}
+
+// Constructs unblinded "bitcoin" output to be used in amount and scriptpubkey checks during pegin validation.
+CTxOut GetPeginOutputFromWitness(const CScriptWitness& pegin_witness) {
+    CDataStream stream(pegin_witness.stack[0], SER_NETWORK, PROTOCOL_VERSION);
+    CAmount value;
+    stream >> value;
+
+    //TODO(rebase) CA
+    //return CTxOut(CAsset(pegin_witness.stack[1]), value, CScript(pegin_witness.stack[3].begin(), pegin_witness.stack[3].end()));
+    return CTxOut(value, CScript(pegin_witness.stack[3].begin(), pegin_witness.stack[3].end()));
+}
diff --git a/src/pegins.h b/src/pegins.h
new file mode 100644
index 0000000000..b6aefaf3f5
--- /dev/null
+++ b/src/pegins.h
@@ -0,0 +1,25 @@
+// Copyright (c) 2017-2018 The Bitcoin Core developers
+// Distributed under the MIT software license, see the accompanying
+// file COPYING or http://www.opensource.org/licenses/mit-license.php.
+
+#ifndef BITCOIN_PEGINS_H
+#define BITCOIN_PEGINS_H
+
+#include <amount.h>
+#include <consensus/params.h>
+#include <primitives/bitcoin/transaction.h>
+#include <primitives/transaction.h>
+#include <script/script.h>
+
+/** Calculates script necessary for p2ch peg-in transactions */
+CScript calculate_contract(const CScript& federationRedeemScript, const CScript& witnessProgram);
+bool GetAmountFromParentChainPegin(CAmount& amount, const Sidechain::Bitcoin::CTransaction& txBTC, unsigned int nOut);
+bool GetAmountFromParentChainPegin(CAmount& amount, const CTransaction& txBTC, unsigned int nOut);
+/** Check whether a parent chain block hash satisfies the proof-of-work requirement specified by nBits */
+bool CheckParentProofOfWork(uint256 hash, unsigned int nBits, const Consensus::Params&);
+/** Checks pegin witness for validity */
+bool IsValidPeginWitness(const CScriptWitness& pegin_witness, const COutPoint& prevout, bool check_depth = true);
+// Constructs unblinded output to be used in amount and scriptpubkey checks during pegin
+CTxOut GetPeginOutputFromWitness(const CScriptWitness& pegin_witness);
+
+#endif // BITCOIN_PEGINS_H