Coinbase Teases cbBTC Amid Wrapped Bitcoin Controversy

Coinbase is seemingly preparing to take advantage of the controversy surrounding the impending restructuring of Wrapped Bitcoin by introducing its own BTC token.

The announcement of cbBTC was teased by Coinbase on social media on August 13, marking the first appearance of the cbBTC ticker with a “coming soon” message. In addition to cbBTC, Coinbase already offers cbETH, a token representing Ether staked within the centralized exchange.

This development comes as Wrapped Bitcoin (WBTC), the leading wrapped Bitcoin token, faces criticism for its restructuring plans. BitGo, the entity behind WBTC, revealed on August 9 that control over Wrapped Bitcoin would be transferred to a joint venture involving Bit Global and Justin Sun, the controversial founder of Tron, after a 60-day period.

MakerDAO, the prominent collateralized debt protocol, is contemplating whether to halt new DAI minting backed by WBTC on both its Maker and SparkLend platforms. Concerns highlighted in a governance proposal include the Bitcoin underlying WBTC no longer being custodied in the U.S., limited public information about the joint venture, and the recent depegs experienced by the TrueUSD stablecoin following Sun’s involvement in the project.

Wrapped or tokenized Bitcoin assets are used to transfer the value of Bitcoin to other networks. WBTC operates on Ethereum and currently holds a market cap of $9.38 billion, representing 0.78% of Bitcoin’s total capitalization.

Jesse Pollak, head of protocols at Coinbase and the creator of Base, Coinbase’s Ethereum Layer 2, expressed enthusiasm for building a robust Bitcoin ecosystem on Base in response to the cbBTC news. Pollak emphasized the goal of establishing a substantial Bitcoin economy on Base.

Base has been gaining traction in the Layer 2 market, with its Onchain Summer campaign driving participation through points distributions. Data from GrowThePie indicates that 3.25 million wallets have engaged with Base in the past week, constituting 61.3% of the active wallets across Ethereum’s Layer 2 ecosystem.

The combined daily transaction volume across Ethereum Layer 2s surged to a new high of 12.5 million on August 13, more than tripling since February. Coinbase contributed significantly to this volume, accounting for 31.8% of the total transactions.

Base stands as the second-largest L2 platform by total value locked, with $6.37 billion, trailing behind Arbitrum One with $15.3 billion.