Coinbase Launches cbBTC Wrapped Bitcoin on Ethereum and Base
Crypto exchange Coinbase has introduced its cbBTC token—a wrapped version of Bitcoin—on both the Ethereum network and its layer-2 scaling solution, Base.
As announced on September 12, cbBTC is fully backed 1:1 by Bitcoin held in Coinbase’s custody and does not have a separate order book or trading pairs on the platform. The wrapped Bitcoin functions by automatically minting cbBTC at a 1:1 ratio when Bitcoin is sent to a Base or Ethereum address, and vice versa; sending cbBTC to a Coinbase address will convert it back to standard Bitcoin.
Coinbase also plans to expand cbBTC to additional blockchain networks and ecosystems in the future, though details have not yet been provided.
Purpose of cbBTC and Industry Controversies
Tokenized Bitcoin aims to integrate the digital asset into decentralized finance (DeFi) applications. The Bitcoin blockchain operates with a series of unspent transaction outputs (UTXO), and Bitcoin wallets are essentially collections of these outputs assigned to specific addresses. This system, along with the challenge of transferring assets between different blockchains, limits Bitcoin’s functionality in DeFi, which is primarily centered on Ethereum.
cbBTC allows users to leverage their Bitcoin for DeFi purposes, such as securing loans or earning yield as a lending asset. At launch, cbBTC will be supported on platforms including Aave, Compound Finance, Morpho, Spark, Moonwell, and others.
“By bringing assets across more chains, wrapped assets like cbBTC help build a more efficient, interconnected, and expansive financial ecosystem,” the Coinbase said in a statement.
Coinbase’s announcement comes shortly after BitGo faced criticism over its plan to shift the custodial structure of its Wrapped Bitcoin (WBTC) product to a multi-jurisdictional setup, including custodial centers in Hong Kong and Singapore. The involvement of Tron founder Justin Sun in this plan raised concerns among industry analysts.
In response, risk management firm Block Analitica suggested restricting all WBTC positions, labeling Sun’s participation in the multi-jurisdiction plan as an “unacceptable level of risk.”
