Coinbase has teased the upcoming launch of cbBTC, a new tokenized version of Bitcoin, on its Base network. Experts told Decrypt they think it could reshape the landscape of tokenized Bitcoin (BTC).
This new token, announced via a cryptic tweet in the early hours Wednesday, signals Coinbase’s ambitious plans to expand its tokenized asset offerings and potentially reshape the landscape of wrapped Bitcoin.
Coinbase has not yet responded to requests for more details from Decrypt.
The introduction of cbBTC comes as the demand for tokenized Bitcoin on Ethereum Virtual Machine (EVM)-compatible chains continues to grow.
Nearly 156,608 BTC, valued at approximately $9.5 billion, has been tokenized and is being used across various decentralized finance (DeFi) ecosystems, according to CoinGecko.
Coinbase’s entry into this space with cbBTC could significantly impact the market dynamics, particularly given the exchange’s brand reputation and established institutional custody solutions.
This development follows Coinbase’s launch of cbETH, a wrapped and staked Ethereum token, in August 2022. The cbETH token now has a circulating supply of about 210,000, according to Coinbase, which means roughly two-thirds the total 600,000 supply that’s been created in the past two years has been burned.
Base creator Jesse Pollak expressed enthusiasm about the potential of Bitcoin on Coinbase’s layer-2 network.
to say it out loud: I love bitcoin, am so grateful for it’s role kickstarting crypto, and we’re going to build a massive bitcoin economy on @base.
— Jesse Pollak (jesse.xyz) 🛡️ (@jessepollak) August 14, 2024
In a tweet following the cbBTC announcement, Pollak stated, “to say it out loud: I love bitcoin, am so grateful for it’s role kickstarting crypto, and we’re going to build a massive bitcoin economy on @base.”
Industry experts said the introduction of cbBTC is likely to have far-reaching implications for the cryptocurrency market, particularly in the realm of DeFi.
Alvin Kan, chief operating officer of Bitget Wallet, told Decrypt that cbBTC is poised to gain rapid market acceptance upon launch, citing Coinbase’s strong reputation and custody services.
“As a globally recognized exchange, Coinbase’s goal is to create a more open, decentralised, and highly liquid tokenized version of BTC,” Kan said.
However, not all experts are convinced that cbBTC will immediately dominate the market.
Jenny Zheng, chair of non-profit organization Lady of Redecentralise, pointed out the established trust network and deep integration of existing wrapped Bitcoin options like WBTC in the DeFi ecosystem. WBTC is currently the 13th largest asset by market capitalization on Coingecko and boasts a $10.7 billion market capitalization.
“This extensive integration provides a strong moat against new entrants,” she said.
Offering a broader perspective on Coinbase’s strategy, Anndy Lian, an intergovernmental blockchain expert, said a new tokenized version of BTC will be well-received, given Coinbase’s reputation and the trust built within the crypto community.
“This is an opportunity to offer a more transparent and reliable alternative to WBTC,” he said, “which could attract users who are wary of Justin Sun’s involvement.”
BitGo, the company behind Wrapped Bitcoin, announced on Friday that it has partnered with BiT Global—a company with links to Tron founder Sun—to launch a new venture that will manage WBTC. The new partnership will leave BitGo as a minority stakeholder, the company said. The pushback on Sun being associated with WBTC has been strong enough to prompt the Tron founder to offer a disclaimer on Twitter.
“My personal involvement in WBTC is entirely strategic,” he wrote, “I do not control the private keys to the WBTC reserves and cannot move any BTC reserves.”
Edited by Stacy Elliott.
