Key points
- Coinbase’s potential cbBTC product follows closely on the heels of controversial changes to BitGo’s WBTC governance.
- Wrapped Bitcoin tokens allow Bitcoin to be used on non-Bitcoin blockchains, primarily Ethereum.
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Coinbase has hinted at the possible launch of a new product called “cbBTC,” sparking speculation that the US-based cryptocurrency exchange could be developing its own wrapped Bitcoin token.
Coming soon.
— Coinbase 🛡️ (@coinbase) August 14, 2024
The official Coinbase account simply stated “cbBTC” followed by “coming soon” in a subsequent comment. An hour later, Jesse Pollak, head of Coinbase’s layer-2 network Base, expressed his enthusiasm for Bitcoin and claimed that Base would build a “massive Bitcoin economy” on its network.
The cryptic messages from Coinbase and Pollak come just days after controversy erupted involving BitGo, the team behind Wrapped Bitcoin (WBTC), and Tron founder Justin Sun. BitGo recently announced plans to transfer control of WBTC to a joint venture that includes BitGo, Hong Kong-based investment manager BiT Global, and Sun’s Tron ecosystem.
This announcement sparked unrest within the decentralized finance (DeFi) community, with some calling for WBTC support to be withdrawn from major protocols. Crypto risk management firm Block Analitica Labs posted a proposal on MakerDAO’s governance forum Requesting the protocol to close all new WBTC debts and prevent further borrowing against WBTC collateral.
BitGo CEO Matt Belshe dismissed security concerns, stating that the controversy was a “reaction to Justin Sun’s name” rather than a proper assessment of the facts. Belshe later clarified that WBTC’s underlying security protocols would remain unchanged. Sun also addressed the issue: declaring “There were no changes at WBTC” and its participation did not include direct access to funds.
The potential launch of a Coinbase-backed Bitcoin token could provide an alternative to WBTC for users seeking exposure to Bitcoin in DeFi applications.
Wrapped Bitcoin tokens allow Bitcoin to be used on non-Bitcoin blockchains, primarily Ethereum, improving interoperability between different blockchain networks and allowing Bitcoin holders to participate in DeFi activities without converting to other cryptocurrencies.
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