Coinbase, the world's second- largest cryptocurrency exchange, announced that it will remove the Wrapped Bitcoin (wBTC) token from its list of assets, effective December 19, 2024.

Users will not be able to make new purchase or sale transactions of wBTC, a wrapped token, starting from the date designated by the American  exchange.

In an announcement on the X platform, Coinbase Assets did not give a specific reason, but instead noted that the decision was made after its latest asset inspection.

“We monitor assets on our exchange to ensure they meet our listing standards. Based on our most recent review, Coinbase will suspend trading of wBTC.”

Coinbase Assets statement.

On the other hand, although trading will be suspended, Coinbase Assets reported that users will still be able to access their wBTC funds stored on Coinbase. They will also be able to withdraw their wBTC to external wallets or compatible exchanges “at any time.”

However, the exchange 's post also clarified that wBTC trading will be available only under the “order limit ” option until the set date.

A limit order is a type of order where the user specifies the exact price at which they wish to buy or sell an asset. This means that the order will only be executed if the market reaches that price or a better one

The wBTC (Wrapped Bitcoin) token is a tokenized representation of Bitcoin (BTC) on the Ethereum (ETH) network, launched in 2019 by a consortium consisting of BitGo, Kyber Network and Ren public Protocol (formerly known as Republic Protocol).

Each wBTC is backed 1:1 by Bitcoin holdings, in this case held by Coinbase, meaning that for every wBTC in circulation, there is one Bitcoin stored as reserve. 

This allows users to participate in the Ethereum ecosystem and its decentralized applications (DeFi) using an asset that is pegged to the value of Bitcoin.

Coinbase's decision sparked responses from the companies behind wBTC

Following Coinbase's notification, Bit Global, a company owned by Justin Sun (creator of the Tron network) and which partnered with BitGo for the custody of WBTC, has expressed its displeasure at the removal of WBTC from Coinbase.

“Coinbase’s decision to delist wBTC, without any concrete reason beyond a vague “recent review,” goes against everything the crypto and DeFi industry stands for. It’s clear that Coinbase’s decision is an attempt to gain a competitive advantage by pushing its own wrapped Bitcoin product, cbBTC, and eliminating WBTC’s largest and most influential competitor.”

Bit Global's publication on X.

Additionally, the team behind Wrapped Bitcoin also made clear their position against the removal of WBTC from Coinbase. 

“We regret and are surprised by Coinbase’s decision to delist WBTC. Over the years, WBTC has established itself as the most decentralized and transparent Wrapped BTC product on the market through innovative mechanisms and rigorous governance. We urge Coinbase to reconsider this decision and continue supporting WBTC trading.”

Team behind Wrapped Bitcoin on X.

BitGo's partnership with Bit Global sparked controversy in the community given that Sun was accused of fraud and manipulation in the past.

So much so that, due to BitGo's alliance with Sun's company, the DeFi platform, Sky, formerly known as MarkerDAO, planned to eliminate the WBTC cryptocurrency as collateral for users to obtain loans. Then, after clarifications from BitGo CEO, Mike Belshe, he backed off his idea.

As Coinbase delists wBTC, it promotes its version of wrapped bitcoin

While Coinbase's post did not go into detail, it could be speculated that the decision was linked to boosting the token , cbBTC, the wrapped bitcoin version that the exchange launched in August 2024 on the Base network, one of the most used second layer (L2) networks of Ethereum (created by Coinbase, but managed by the community).

In addition, to reinforce this hypothesis (which is just that, a hypothesis), on November 19, 2024, the same day that Coinbase announced its decision regarding wBTC, the exchange announced that the cbBTC token will be natively integrated into the Arbitrum network, the largest L2 on Ethereum.