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Coinbase has made a significant announcement regarding the future of Wrapped Bitcoin (WBTC), revealing that it will suspend trading across all its platforms, including Coinbase.com and Coinbase Prime. This suspension will take effect on December 19, 2024, at around 12 p.m. ET. Despite the halt in trading, users will still have the option to transfer their WBTC tokens off the platform even after the delisting occurs.
Current Trading Status of WBTC
In preparation for the upcoming delisting, Coinbase has already shifted its WBTC order books to a limit-only mode. This allows users to place and cancel limit orders as they navigate the final days of trading. While matches can still occur prior to the suspension, it is essential for users to be proactive in managing their assets during this transition period.
Background on Wrapped Bitcoin
Wrapped Bitcoin, the largest tokenized version of Bitcoin that operates on the Ethereum blockchain and others, has gained popularity among users looking for interoperability within decentralized finance (DeFi) platforms. With a market capitalization of $13.6 billion, WBTC was launched in 2019 to enhance Bitcoin’s liquidity in the DeFi ecosystem. Each WBTC token is backed 1:1 by Bitcoin, ensuring participants have a stable and reliable asset.
Coinbase’s Decision and WBTC Team’s Response
Although Coinbase has indicated that its decision to suspend WBTC trading results from a “most recent review,” the exchange has not provided specific reasons behind this significant move. In response, the team behind WBTC has voiced their disappointment, underscoring their dedication to compliance, transparency, and decentralization. They have defended their product as “the most decentralized wrapped BTC solution on the market” and have expressed surprise at Coinbase’s choice to delist WBTC.
Custody Changes and Industry Impact
Originally, BitGo served as the primary custodian for the Bitcoin backing WBTC. However, recent governance changes saw BitGo distribute custody duties to three entities in August, including BiT Global, a Hong Kong-based trust company. This restructuring raised eyebrows in the industry, particularly due to BiT Global’s significant connection to Justin Sun, known for his controversial presence in the crypto realm. Consequently, MakerDAO has restricted the use of WBTC as collateral for minting DAI, citing governance risks. Similarly, Aave announced their intention to monitor the developments closely.
Coinbase’s New Offering: cbBTC
In response to the shifting landscape and growing user concerns, Coinbase has introduced its own Wrapped Bitcoin token, called cbBTC, which was launched in September 2024. Fully backed by Bitcoin held in Coinbase custody, cbBTC aims to establish itself as a trusted alternative within the market. Since its launch, cbBTC has quickly gained traction, achieving a market cap of $1.3 billion with over 15,000 tokens in circulation. Analytics reveal that the majority of cbBTC’s activity occurs on the Base network (82%), followed by Ethereum (16%) and Solana, indicating its emerging role within the DeFi ecosystem.
Next Steps for WBTC Holders
With the imminent suspension of WBTC trading, it is crucial for customers holding WBTC on Coinbase to take proactive measures. Users are advised to transfer their assets to self-custody wallets or alternative platforms before the trading halt takes effect. This foresight will help ensure that users maintain control over their assets amid the changing dynamics of the market.
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