In a surprising turn of events, BiT Global has accused Coinbase of snubbing its Wrapped Bitcoin to promote its own Bitcoin wrapper. The exchange has accused Coinbase of using “competitive advantage” to promote its own coin.
BiT Global Questions Coinbase’s Decision to Halt wBTC
BiT Global claims that Coinbase halted Wrapped Bitcoin (wBTC) trading to promote Coinbase Wrapped BTC (cbBTC), their own Bitcoin wrapper. With its recent partial takeover of wBTC’s Bitcoin custodian, the Hong Kong-based exchange said Coinbase’s move is intended to end competition for cbBTC, which went live in September.
With approximately $14 billion in total value locked (TVL), wBTC is the most popular Bitcoin wrapper. It was delisted after Coinbase issued a statement on November 19 stating that it had “failed to meet listing standards.”
BiT Global contends that this action is a ploy to support Coinbase’s recently launched wrapped Bitcoin product, cbBTC. According to a BiT Global representative, it’s evident that Coinbase is promoting its own wrapped Bitcoin product while eliminating wBTC, the biggest rival.
What is wBTC?
The term “wBTC” refers to Bitcoin that has been altered for use within the Ethereum network. One wBTC is always equal to one Bitcoin since wBTC is an Ethereum currency that was introduced in January 2019 and is backed one-to-one by Bitcoin (BTC).
Users can engage with various Ethereum decentralized applications (dApps) including, specifically, the Ethereum decentralized finance (DeFi) ecosystem, using the wBTC currency.
Typically, while obtaining a cryptocurrency loan on DeFi platforms, wBTC is used as collateral, or a pledge for mortgage payments. The wBTC collateral is returned after the borrowed cryptocurrency is repaid. The platform recovers the wBTC if the collateral is liquidated.
Coinbase’s Decision To Delist wBTC: What Was The Reason?
Coinbase’s decision to delist wBTC has sparked a huge debate around the fairness and monopoly that big exchanges hold in the sphere.
However, the decision also came with the background of the recent controversy surrounding WBTC custodian BitGo’s decision to enter into a joint venture partnership with BitGlobal, which was co-founded by Justin Sun, which may have had a significant impact on Coinbase’s decision. Sun’s participation cast doubt on the viability of WBTC’s ongoing decentralized structure.
Other predictions argue that the delisting of WBTC was necessary since Coinbase’s wrapped Bitcoin token, cbBTC, has recently grown, rendering the exchange unsafe.
In recent months, cbBTC has been included into a number of blockchain platforms, including the Solana ecosystem. On Tuesday, Coinbase declared that the wrapped Bitcoin token has entered the Arbitrum network.