Key Points
- Coinbase will suspend trading of Wrapped Bitcoin (WBTC) on December 19, 2024, following BitGo’s controversial partnership with Justin Sun’s TRON ecosystem through BiT Global.
- Coinbase’s own wrapped bitcoin token (cbBTC) has rapidly gained market share, reaching $1.5 billion in market cap and capturing 17% of Aave’s synthetic Bitcoin market.
Protocol Control Shift Sparks Industry Concerns
Coinbase announced on Tuesday that it will suspend trading of Wrapped Bitcoin (WBTC), the largest tokenized version of BTC on Ethereum, citing failure to meet its listing standards. The suspension will take effect on December 19, 2024, at approximately 12 PM ET, though users will retain the ability to withdraw their WBTC tokens after the delisting.
The decision follows significant changes in WBTC’s protocol governance. In August, BitGo, the longtime primary custodian of WBTC, announced a strategic partnership that would distribute control over the project’s custody to three entities, including Hong Kong-based BiT Global, which has ties to TRON founder Justin Sun.
Market Impact and Industry Response
The protocol control changes have prompted swift reactions across the cryptocurrency industry. MakerDAO voted to limit the minting of its DAI stablecoin using WBTC as collateral, while decentralized lender Aave announced it would closely monitor the situation.
WBTC, which launched in January 2019 with a current market capitalization exceeding $13.6 billion, has shown signs of stress since the announcement. The token has been trading at a consistent discount against BTC since August, marking its most significant divergence since the FTX collapse.
Coinbase’s Strategic Counter with cbBTC
In response to market dynamics, Coinbase has successfully positioned its own wrapped bitcoin token, cbBTC, as an alternative. Launched in September 2024, cbBTC has demonstrated remarkable growth, achieving a market capitalization of approximately $1.5 billion within months of its launch.
According to a Kaiko report, cbBTC has made significant inroads in adoption, particularly on the Aave platform, where its share of the synthetic Bitcoin market has increased from 3% to 17% since early October. This rapid growth has been partially attributed to targeted incentives, including Aave’s October Merit reward program, which promotes cbBTC deposits and USDC borrowing.
