Coinbase has decided to suspend trading for wrapped bitcoin (WBTC) on December 19, 2024.
The exchange said the decision was due to its periodic review of assets to ensure compliance with the exchange’s listing standards.
WBTC order books are in limit-only mode to facilitate an orderly transition. After the delisting of WBTC on Coinbase, users can still withdraw their WBTC tokens.
However, the company assured that it will continue the withdrawal support indefinitely to keep customers’ access to funds.
Notably, the announcement dovetails with growing nervousness over the WBTC protocol’s increasingly complex governance model.
At the time, BiTGlobal had just formed a joint venture with the main custodian of WBTC on BitGo.
Coinbase Ends WBTC Support Amid Governance Concerns
Both BitGo and BiTGlobal said the partnership is a major shift in the WBTC custody model. Previously, BitGo held the primary keys of the WBTC protocol with transparency and oversight.
Industry concerns persist amid the inclusion of Justin Sun-linked entities in the governance structure.
MakerDAO and Aave partnered up with precautions in the decentralized finance (DeFi) space.
MakerDAO voted to limit stablecoin DAI from being collateralized with WBTC, and Aave committed to watching the developments closely.
The actions indicate there’s low confidence on the governance structure’s ability to sustain WBTC.
As Sun’s involvement continues to stir up industry debate, Coinbase’s decision is seen as a major move. Market capitalization is up.
However, competition among tokenized Bitcoin offerings has been intense, and Sun’s initiative has come under scrutiny from Coinbase and others.
cbBTC as Safer Bitcoin Alternative
With Coinbase’s launch of cbBTC and Kraken’s offerings of tokenized bitcoin, competition in the tokenized Bitcoin space has gotten heated.
According to Coinbase, its cbBTC fulfills rigorous standards, making it a safer alternative for WBTC.
At the time of writing, on Coinbase, cbBTC’s market cap was around $1.4 Billion. Unlike cbBTC, Sun’s Poloniex platform also released a competing tokenized Bitcoin version, which is much larger.
Industry critics, including Sun, have derided Coinbase’s proof of reserves transparency as not meeting current industry standards.
But Sun’s platforms have also come under criticism for similar accusations, raising doubt over his claims.
This delisting decision will likely rewrite the rules of the game for tokenized Bitcoin product lists.
Coinbase’s action could inspire investors and encourage the adoption of alternative tokenized assets such as cbBTC.
At the same time, WBTC’s market perception may remain constrained by its reliance on changing governance.
