How Coinbase’s cbBTC Aims to Cash in on WBTC Uproar

• WBTC has come under fire for recent Justin Sun links.
• Coinbase has teased a WBTC alternative amid the backlash.
• Experts remain divided on whether the Coinbase-backed alternative will be a game-changer.

Despite being the most valuable cryptocurrency, there is very little that people can do with Bitcoin beyond payments. This limited utility has led to the proliferation of tokenized versions of the asset for use on more programmable blockchains where the asset could have various applications, including as collateral for loans.

Over the weekend, however, the most popular version of these tokens, Wrapped Bitcoin (WBTC) , came under fire , as its custodian BitGo disclosed that it would be handing over custody of the token to a joint venture with BiTGlobal, a firm linked to the controversial Tron founder Justin Sun . Amid the backlash and calls to boycott the token in response to the management change, leading crypto exchange Coinbase is looking to capitalize with a WBTC alternative to capture some of the tokenized Bitcoin market share.

Coinbase Teases cbBTC

Coinbase is gearing up to make a play for the tokenized Bitcoin market amid uproar over WBTC’s management change. On Wednesday, August 14, the firm stoked anticipation of a wrapped Bitcoin product by posting “cbBTC” on X, a ticker that follows the convention of its staked Ethereum (ETH) product cbETH. The firm further stoked speculation by posting “coming soon” hours later. 

Many believe the teased product will launch on the Coinbase-incubated Ethereum Layer 2 Base . The sentiments come amid posts from the official Base X account and the project’s lead developer, Jesse Pollak.

Responding to Coinbase’s post, the Base account wrote : “Based.” At the same time, Pollak asserted “every single asset in the world will have a home on Base,” a post he followed with a statement on plans to build “a massive Bitcoin economy on Base.”

Whether the asset would be restricted to Base alone remains to be seen. Still, its planned launch has stoked significant excitement within some circles amid anticipation of lower minting and redemption fees. Despite this excitement, not all experts agree that the product will be a hit.

Will cbBTC Be a Game-Changer?

Following Coinbase’s teaser, many have suggested that cbBTC will likely eventually surpass WBTC in market cap, aided by belief in Coinbase’s reputation compared to Justin Sun and anticipated low fees to lure users. Among those who share this belief is Dan Elitzer, co-founder of crypto venture capital firm Nascent. Elitzer predicted that cbBTC could overtake WBTC in market cap in six months. 

But not all are as optimistic as Nascent’s Elitzer. Wei Dai, a Research Partner at 1kx, another crypto investment firm, asserted, “cbBTC is not the endgame.” Backing up his perspective, Dai pointed to TVL of Ethereum variants on Base. The data showed $1.5 billion in ETH, $85 million in wrapped staked ETH (wsETH), and $76 million in cbETH.

For context, WBTC has a market capitalization of $9.4 billion, per CoinMarketCap data at the time of writing.

Amid these debates over the viability of a cbBTC product, others like Fortune Magazine Editor Jeff John Roberts have poked holes at the desire of the crypto industry to keep building wrapped tokens, which introduces complexity that is harmful to mainstream adoption.

On the Flipside

• Despite the recent WBTC backlash, CoinMarketCap data suggests that the token’s market capitalization has grown by over 4% in the past 24 hours.
• It remains unclear when Coinbase’s cbBTC will launch.

Why This Matters

WBTC has become an important DeFi gateway for Bitcoin holders, letting them explore sophisticated yield strategies. Amid recent questions over the continued reliability of the product under new management, Coinbase’s cbBTC could offer a much-needed alternative.

Read this for more on the WBTC debacle:
MakerDAO Protests Justin Sun’s Role in WBTC Custody Changes

Grayscale has launched yet another crypto fund. Read more:
Grayscale Continues Expansion Spree with MakerDAO (MKR) Trust