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Coinbase has hinted at the possible launch of a new product dubbed “cbBTC”, fueling speculation that the US-based crypto exchange may be developing its own wrapped Bitcoin token.

Coming soon.

— Coinbase 🛡️ (@coinbase) August 14, 2024

Coinbase’s official account simply listed “cbBTC” followed by “coming soon” in a subsequent comment. An hour later, Jesse Pollak, head of Coinbase’s layer-2 network Base, expressed his enthusiasm for Bitcoin, stating that Base would build a “massive Bitcoin economy” on its network.

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

The announcement sparked concerns within the decentralized finance (DeFi) community, with some calling for WBTC support to be removed from major protocols. Crypto risk management firm Block Analitica Labs posted a proposal on the MakerDAO governance forum requesting 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 Justin Sun’s name” rather than an accurate assessment of the facts. Belshe later clarified that the underlying WBTC security protocols would remain unchanged. Sun also weighed in on the issue, saying there had been “no changes to WBTC” and that his involvement did not include direct access to funds.

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

Wrapped Bitcoin tokens allow Bitcoin to be used on non-Bitcoin blockchains, primarily Ethereum. This improves interoperability between different blockchain networks and allows Bitcoin holders to participate in DeFi activities without having to convert to other cryptocurrencies.

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