21.co’s Bitcoin wrapper Chainlink to add backup verification
21.co, the parent company of the cryptocurrency asset manager 21Shares, announced on September 23 that Chainlink's backup verification to 21BTC to address possible concerns about Bitcoin (BTC) wrap support.
Integrating backup proofs into 21BTC by Ethereum and Solana “protects against malicious innovation by incorporating cryptographic guarantees that new tokens are backed by backups,” 21.co said.
The announcement follows a wave of skepticism among cryptocurrency retail investors regarding the safety of bitcoin wrappers that support bitcoin wrappers from the underlying space, including Wrapped Bitcoin (WBTC) and Coinbase Wrapped BTC (cbBTC).
ChainLink's proof of reserve automatically audits financial data – including off-chain reserve accounts – and transmits that information to a blockchain-based smart contract in real time.
Source: Chainlink
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In the year August 9, BitGo – The custodian of WBTC's Bitcoin backing –BiT Global, a Hong Kong-based crypto exchange, has agreed to take partial control of the multi-signature wallet that holds the Bitcoin holdings.
“This announcement has proven controversial due to the involvement of Justin Sun, with many in the ecosystem, expressing concern about his ‘possible abuse of securities' expressing concerns about associated projects,” Threshold, a rival Bitcoin wrapper, said in August.
Sky — the decentralized finance (DeFi) protocol formerly known as Maker — has chosen to drop WBTC from its platform. Coinbase's cbBTC has surged in popularity since its launch on September 12th, emerging as the third largest coined BTC token.
Since then, cbBTC has been given a rough estimate of the security of BTC support. This was partly set up on September 16 by asset manager BlackRock's demand for faster BTC withdrawals. BlackRock uses Coinbase to protect its BTC position in the iShares Bitcoin Trust (IBIT).
On September 22nd, Coinbase Chief Legal Officer Paul Grewal denied rumors that Coinbase did not intend to refund cbBTC owners for lost BTC support due to a cyber security exploit.
Source: Paul Grewal
In the United States, regulated custodians and exchange-traded fund (ETF) sponsors — such as Coinbase and BlackRock, respectively — are subject to stricter oversight and reporting requirements, including regular third-party audits.
“BlackRock will disclose this to institutional clients upon request, however [is] Bloomberg Intelligence ATF analyst Eric Balchunas said in a Sept. 23 post on the X forum.
“Just know this isn't an amateur watch, BlackRock has 500 ETFs that store its holdings. [with] Guardians and has been doing this for decades [without] One problem,” said Balchunas. “That's why they and other ETF issuers are so trusted by US advisors.”
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