Coinbase hints at possible launch of a packaged Bitcoin token

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Coinbase has hinted at the potential launch of a new product called “cbBTC”, sparking speculation that the US cryptocurrency exchange could develop its own packaged Bitcoin token.

Soon.

— Coinbase 🛡️ (@coinbase) August 14, 2024

Coinbase’s official account simply said “cbBTC” followed by “coming soon” in a later comment. An hour later, Jesse Pollak, Head of Coinbase’s Tier 2 Network, expressed his excitement for Bitcoin and stated that Base will build a “massive Bitcoin economy” on its network.

The cryptic messages from Coinbase and Pollak come just days after controversy erupted involving BitGo, the team behind Wrapped Bitcoin (WBTC), and Tron founder Justin Sun. BitGo recently announced plans to transfer control of WBTC to a joint venture that includes itself, Hong Kong-based investment manager BiT Global and the Sun Tron ecosystem.

This announcement raised concerns in the decentralized finance (DeFi) community, with some calling for WBTC support to be pulled from major protocols. Crypto risk management firm Block Analitica Labs published a proposal on MakerDAO’s governance forum asking the protocol to close all new WBTC debt and prevent new loans against WBTC collateral.

BitGo CEO Matt Belshe dismissed the security concerns, saying the controversy was a “reaction to the name Justin Sun” rather than a proper assessment of the facts. Belshe later clarified that the core WBTC security protocols will remain unchanged. Sun also addressed the issue, saying there were no “changes to WBTC” and its involvement did not include direct access to the funds.

The potential launch of a Coinbase-backed packaged Bitcoin token could provide an alternative to WBTC for users seeking exposure to Bitcoin in DeFi applications.

Wrapped Bitcoin tokens allow Bitcoin to be used on non-Bitcoin blockchains, primarily Ethereum, improving interoperability between different blockchain networks and allowing Bitcoin holders to participate in DeFi activities without converting to other cryptocurrencies.

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