Coinbase Plans Tokenized Bitcoin Launch Amid BitGo’s WBTC Custody Controversy

Coinbase Plans- BitGo Partners with BiT Global as Coinbase Prepares for cbBTC Launch

Coinbase Plans– Crypto exchange giant Coinbase has hinted at an exciting development on X, revealing plans for a new tokenized bitcoin product named cbBTC. This upcoming product is expected to closely resemble Coinbase’s existing Ethereum staking derivative, cbETH. Although specific details about cbBTC are still under wraps, Coinbase’s follow-up post on X promises that it’s coming soon, suggesting that the launch could be imminent.

A New Competitor in the Tokenized Bitcoin Space

The cbBTC product will allow users to hold bitcoin on Ethereum and Layer 2 chains, potentially providing new liquidity avenues and integrating with Base, the blockchain developed by Coinbase. Jesse Pollak, the lead at Base, expressed enthusiasm about the project, noting his commitment to building a significant bitcoin economy on the platform. Once launched, cbBTC will face competition from BitGo’s wrapped bitcoin (WBTC), the leading tokenized BTC product with a market cap exceeding $9 billion.

BitGo Partners with BiT Global Amid Security Concerns

The timing of Coinbase’s announcement aligns with recent news from BitGo, the custodian of WBTC. BitGo has entered a partnership with BiT Global, a Hong Kong-based firm associated with Tron founder Justin Sun, to manage WBTC custody. This partnership aims to offer multi-jurisdictional and multi-institutional custody for WBTC. However, the involvement of Sun and potential centralization have sparked security concerns.

In response, MakerDAO’s risk management team, Block Analitica Labs, has suggested suspending new borrowings against WBTC collateral. BitGo’s CEO, Mike Belshe, defended the company’s approach, reaffirming its commitment to security and the legal oversight of both BitGo and BiT Global.