On December 19, Coinbase will officially cease trading Wrapped Bitcoin (WBTC) on its platform, a decision that has sparked conversation within the cryptocurrency community. This action stems from the token’s perceived inability to meet Coinbase’s listing requirements, as outlined in their November 19 announcement. Although users will retain the ability to withdraw their holdings post-delisting, the exchange is notably vague about the specific criteria WBTC failed to satisfy. This lack of transparency invites speculation regarding Coinbase’s evaluation process and raises questions about the internal standards governing asset listings.
The timing of this delisting coincides with significant changes in WBTC’s custody arrangements. BitGo, the issuer of WBTC, plans to enhance its global reach through a multi-jurisdictional custody model. Notably, control of WBTC has transitioned to a joint venture involving BiT Global, which is linked to Justin Sun, the controversial founder of TRON. This shift has raised eyebrows in the crypto community, with many expressing apprehension over the extent of Sun’s influence on WBTC’s governance. Such anxieties were palpable enough for various decentralized finance (DeFi) protocols, including the platform formerly known as Maker, to move towards excluding WBTC as collateral for stablecoins like DAI.
In the wake of WBTC’s impending delisting, Coinbase has made strategic moves to fill the vacuum left in the synthetic Bitcoin market by introducing Coinbase BTC (cbBTC). Launched just a few months prior, cbBTC has quickly gained traction, enjoying a remarkable growth trajectory—the report from Kaiko indicated that cbBTC’s market presence on the leading money market, Aave, surged from 3% to an impressive 17% since early October. With a burgeoning market capitalization of $1.3 billion, cbBTC has captured nearly 10% of the markets previously dominated by WBTC, signaling its growing appeal as an alternative wrapped asset.
It’s important to recognize that while wrapped assets like WBTC and cbBTC are designed to mirror Bitcoin’s value, they can exhibit substantial market deviations based on various factors. The scenario surrounding WBTC has been particularly striking, as it has consistently traded at a discount relative to Bitcoin since August, hitting its lowest point of divergence in the wake of the FTX collapse. This situation compels investors to critically assess the reliability and stability of wrapped assets, which may not guarantee the same security and predictability as their underlying currencies.
Coinbase’s decision to delist WBTC highlights significant ongoing changes within the cryptocurrency ecosystem. The emergence of cbBTC illustrates a responsive market behavior, as investors increasingly seek alternatives in the wake of perceived instability. The events surrounding WBTC serve as a cautionary reminder of the ever-evolving nature of digital assets and the necessity for vigilant scrutiny of custodial practices, governance structures, and market performance. As the cryptocurrency landscape continues to transform, stakeholders must remain observant of how these dynamics influence asset viability and investment strategy.