3 months ago
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The US-based crypto exchange Coinbase has hinted at the launch of a new product tagged cbBTC through a post on their X page.
Coinbase made a cryptic post on its official X account in which it simply wrote “cbBTC” and later added, under the comment section of the same post, “coming soon”. This post has led many in the crypto community to start making guesswork and speculations that Coinbase plans to launch its version of a wrapped Bitcoin token.
The speculation heated up after Jesse Pollak, the head of Coinbase’s layer-2 network Base, expressed his love for Bitcoin and appreciated the largest crypto by market cap for its role in kickstarting digital assets. Pollak stated that Base would work to build a massive Bitcoin economy on its network.
Another comment made by a Coinbase ambassador, Cryptic Poet, whose message was reposted by Pollak, added to the speculation. He wrote that he had not moved his BTC for years but would move them if he could bring them to Base.
Controversy Surrounding Wrapped Bitcoin (WBTC)
Coinbase’s announcement came a few days after the BitGo team, the developers behind Wrapped Bitcoin (WBTC), announced plans to transfer control of the project to a joint venture that includes Hong Kong-based investment firm BiT Global and Tron founder Justin Sun.
BitGo‘s decision to involve Justin Sun has caused much controversy within decentralized finance (DeFi). Crypto risk management firm Block Analitica Labs wrote a proposal to the MakerDAO government forum asking the protocol to close all new WBTC debts and stop new borrowing against WBTC collateral. The firm said Sun’s involvement is an unacceptable level of risk.
BitGo CEO Matt Belshe has addressed the controversy and criticism. He has ruled out every security concern, stating that the WBTC protocol would remain the same regardless of the change in ownership structure. He further mentioned that the criticisms are a reaction to Sun’s involvement and not based on fact.
Sun has also cleared the air, clarifying his involvement. He noted that no changes will be made to WBTC and that he will not have direct access to funds in the new deal.
Potential Impact of Coinbase’s Wrapped Bitcoin Token
While Coinbase has not yet provided any official details about the potential cbBTC product, the company’s recent hints, coupled with the ongoing WBTC controversy, have fueled speculation that the exchange may be looking to offer its own version of a wrapped Bitcoin token, potentially leveraging its Base layer-2 network.
Should Coinbase eventually launch its Coinbase-backed wrapped Bitcoin token, it would offer an alternative option for users looking for Bitcoin exposure within decentralized finance (DeFi) applications.
Wrapped Bitcoin is a token that represents Bitcoin on the Ethereum blockchain. It allows the usage of BTC on a non-bitcoin blockchain network and enables BTC holders to participate in the Ethereum decentralized finance space without the need to convert their holdings into other cryptocurrencies.
