Coinbase cbBTC Aims To Challenge BitGo’s WBTC Dominance

By: Isha Das

Coinbase appears poised to shake up the wrapped Bitcoin market with its upcoming product, cbBTC, according to recent disclosures from the firm.

On August 13, Coinbase's official X (formerly Twitter) account teased the product with a post stating “cbBTC coming soon.” Shan Aggarwal, Head of Corporate and Business Development at Coinbase Ventures, commented that it had been “hard to keep this under wraps.”

Although details remain scarce, Jesse Pollak, lead developer of Coinbase’s Base network, has hinted at plans to create a substantial Bitcoin economy on the Ethereum Layer-2 network. He stated, “To say it out loud: I love bitcoin, I'm so grateful for its role in kickstarting crypto, and we're going to build a massive bitcoin economy on Base.”

Dan Elitzer, co-founder of the venture capital firm Nascent, suggested that cbBTC would be strategically crucial for Coinbase. He speculated that this new product could surpass BitGo’s current Wrapped Bitcoin (WBTC) supply within six months of its launch. “cbBTC was inevitable and super strategic to Coinbase. Frankly, I’m surprised they didn’t ship this years ago,” he commented.

This sentiment is echoed by DCinvestor, a pseudonymous crypto investor, who believes Coinbase could leverage cbBTC to convert its Bitcoin holders into users of Base and Ethereum.

WBTC Troubles

Coinbase's announcement about cbBTC comes amid recent controversies surrounding Tron founder Justin Sun’s involvement with BitGo’s WBTC.

On August 9, BitGo revealed plans to transfer WBTC management to a new joint venture involving itself, Hong Kong-based investment manager BiT Global, and Sun. This decision stirred significant backlash within the crypto community, with concerns primarily focused on Sun’s involvement.

Despite these concerns, BitGo CEO Mike Belshe and Justin Sun have maintained that Sun's role is purely strategic. Sun stated, “The minting process is entirely managed by the custodians BitGlobal and BitGo following the same procedures as before. In simple terms, BitGlobal and BitGo will not sign any unaudited transactions. The keys are still safeguarded using the same BitGo cold wallet technology and offline keys, with backups in multiple countries and regions.”

Nevertheless, Elitzer criticized the move, suggesting that no experienced DeFi user or risk manager would want to retain exposure to WBTC under Sun’s influence. He also noted that this shift in management could lead to significant disruption, prompting various protocols and platforms to support alternative bridged BTC solutions.