Coinbase To Delist wBTC Trading Amid Justin Sun Increasing Influence

Coinbase has officially announced plans to suspend trading for Wrapped Bitcoin (wBTC) starting December 19, 2024. Users will retain the ability to transfer their wBTC tokens off the exchange even after the delisting. The crypto exchange stated that this decision follows routine asset reviews to ensure compliance with its listing standards.

Coinbase Suspends wBTC Trading Amid Push For Exchange’s cbBTC

According to a recent post on X, Coinbase confirmed it will stop supporting Wrapped Bitcoin trading next month, though users will still have the option to move their tokens to external wallets. The exchange emphasized its commitment to maintaining a secure and compliant platform, explaining that the decision stems from its periodic reviews of listed assets.

In response, the WBTC team expressed its disappointment and surprise at Coinbase’s decision to delist Wrapped BTC. It emphasized its unwavering commitment to providing the most compliant, transparent, and decentralized BTC tokenization product. 

The team added, 

“We urge Coinbase to reconsider this decision and continue supporting WBTC trading. If you have any questions or suggestions, please feel free to reach out to us. We are more than willing to provide additional information to address any concerns.”

This development comes as the top crypto exchange increasingly focuses on promoting its proprietary wrapped Bitcoin product, cbBTC. The cbBTC token, introduced earlier this year, has rapidly gained traction and reached a market capitalization of $1.5 billion. This poses a direct competition to wBTC. The delisting decision coincides with cbBTC’s growth as a preferred tokenized Bitcoin solution.

In August, BitGo, the primary custodian of wBTC, announced it would relinquish partial control of the protocol to BiT Global and Justin Sun, founder of TRON. This partnership has led to widespread concerns across the crypto sector due to Sun’s controversial reputation and his growing influence over the ecosystem.

As part of the collaboration, custody responsibilities were distributed across multiple entities to enhance operational resilience. However, critics argue that Sun’s involvement raises questions about governance and compliance. This has prompted several platforms to reassess their stance on wBTC. For instance, MakerDAO imposed restrictions on minting its DAI stablecoin using wBTC as collateral, while Aave initiated active monitoring of the situation.

cbBTC Gains Momentum As Alternative

While wBTC faces scrutiny, Coinbase’s cbBTC has emerged as a strong competitor. Positioned as a centralized custodian product, cbBTC allows users to access Bitcoin liquidity on Ethereum and other blockchains. Coinbase has marketed cbBTC as a transparent and secure alternative, reassuring users with regular audits by Deloitte.

The exchange has actively promoted cbBTC, highlighting its seamless integration with DeFi protocols and support for institutional clients. Despite criticisms from Justin Sun over the lack of Proof-of-Reserve and potential government intervention risks, the exchange maintains that cbBTC complies with regulatory requirements.

In response to Sun’s allegations Coinbase CEO Brian Armstrong defended the product, reiterating its operational transparency. Armstrong clarified that cbBTC has always been presented as a custodian-based product, with all transactions settled on-chain. He dismissed concerns about government intervention as speculative, emphasizing commitment to securing client funds.

Amid these concerns, Brian Armstrong is set to meet with President-elect Donald Trump to discuss cryptocurrency policy and potential advisory roles in the incoming administration.

Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.