Coinbase recently announced that it will be suspending trading of Wrapped Bitcoin, also known as WBTC, on December 19, 2024. This decision comes after a routine asset review and will affect all platforms under Coinbase, including Coinbase.com and Coinbase Prime. Despite the delisting, users will still be able to withdraw WBTC from the exchange.
WBTC was introduced in 2019 as a way to allow Bitcoin liquidity to enter decentralized finance ecosystems through tokenization. The token is designed to be pegged 1:1 with Bitcoin and currently has a market cap exceeding $13.6 billion. BitGo, the primary custodian of WBTC, has historically managed the underlying Bitcoin reserves.
However, recent changes in the governance of the WBTC protocol have raised concerns within the industry. In August, BitGo announced a partnership with BiTGlobal, a trust company based in Hong Kong associated with TRON founder Justin Sun. This move aimed to enhance geographical decentralization but has led to questions about Sun’s increasing influence over the protocol. As a result, some crypto projects are reevaluating their involvement with WBTC due to potential governance risks.
Coinbase’s decision to delist WBTC coincides with the rise of its own tokenized Bitcoin product, cbBTC, which was launched earlier in the year. With a market cap of $1.5 billion, cbBTC is becoming a notable competitor in the wrapped Bitcoin market.
In response to Coinbase’s announcement, the WBTC team expressed surprise and disappointment, stressing their commitment to compliance, transparency, and decentralization. They emphasized the rigorous governance, secure custody processes, and regulatory adherence of WBTC, positioning it as the most decentralized wrapped BTC solution available.
Despite the setback, the WBTC team has urged Coinbase to reconsider its decision and offered to provide additional information or clarification to address any concerns. They remain dedicated to providing the community with a compliant, transparent, and decentralized BTC tokenization product.
Overall, the delisting of WBTC by Coinbase reflects the evolving landscape of tokenized assets and the increasing competition within the market. As industry players navigate governance challenges and seek to maintain decentralization, the future of wrapped Bitcoin and similar projects remains uncertain.