cbBTC surged past $1 billion when Coinbase stopped supporting WBTC.

Coinbase, the largest US-based crypto exchange, has announced that it will end trading for Wrapped Bitcoin (WBTC) on December 19, 2024, at 12:00 PM ET.

The decision, revealed in a post on X (formerly Twitter), refers to a formal review of listed properties to ensure compliance with listing standards.

Coinbase Sidesteps WBTC Amidst cbBTC Boom

The ban applies to both Coinbase Exchange and Coinbase Prime. Even if trading stops, WBTC holders retain full control of their funds and the ability to withdraw at any time. In preparation for the transition, Coinbase has moved WBTC trading into limit-only mode, where users can cancel limit orders when there are still potential matches.

“Coinbase will cease trading for WBTC (WBTC) on or around December 19, 2024, at 12 pm ET. Your WBTC funds will remain accessible to you, and you will continue to have the ability to withdraw your funds at any time. We have moved our WBTC order books into limit-only mode. Limit orders may be placed and canceled, and matches may occur,” Coinbase detailed.

Coinbase's move to ban WBTC comes amid the rapid success of its cryptocurrency token, cbBTC. Recently, cbBTC surpassed the $1 billion market capitalization, reflecting the growing adoption and trust in the crypto community. This milestone has cemented cbBTC's position as a strong competitor to WBTC in the decentralized finance (DeFi) space.

As of this writing, data on Dune shows that cbBTC's market capitalization has increased to $1.44 billion. CBTC's native presence on networks like Solana, Ethereum, and Base has greatly expanded its reach, with Arbitrum being the latest addition.

“cbBTC operates on arbitrage. cbBTC is an ERC-20 token backed 1:1 by Bitcoin (BTC) owned by Coinbase. It is available natively and securely on Arbitrum and is accessible to many users in the Ethereum ecosystem,” Coinbase shared on Tuesday.

In addition, popular DeFi protocol Aave is targeting cbBTC for the version 3 (V3) platform, increasing its utility in the ecosystem. This growing momentum may have played a key role in Coinbase's decision to stop trading WBTC.

WBTC core team encouraged Coinbase to rethink

The team behind Bundle Bitcoin expressed regret and surprise at Coinbase's decision. In a statement on X, WBTC's core team emphasized its commitment to compliance, transparency and decentralization.

“We regret and are surprised by Coinbase's decision to cancel WBTC…. We urge Coinbase to reconsider this decision and continue to support WBTC trading,” the group said.

The statement cited WBTC's long-standing reputation for innovation, regulatory compliance and decentralization. Highlighting its seamless integration with DeFi protocols, WBTC has established itself as an essential liquidity solution for Bitcoin users. Asking Coinbase to reconsider, WBTC confirmed it is ready to address any concerns or provide additional information to support its case.

Meanwhile, Coinbase's announcement has sparked mixed reactions in the crypto community. Some users criticized the exchange, saying the decision showed a failure to regulate competition.

“Coinbase can't handle fair competition?? WBTC is better than cbBTC,” Gali Sama said in a post.

However, others support the move, citing concerns about WBTC's custody model, with one user citing BitGo's recent adoption of a multi-law custody system.

“You put him on guard with a fraudulent hand. What did you think would happen?” User defined.

BeinCrypto recently reported that this criticism is related to concerns about Justin Sun's involvement in WBTC's custody processes. Some users have already taken steps to avoid potential risks, with one commenter sharing their bookings.

“When Sun Multisig came out for Wsig, I sent all my WBTC to Coinbase on OP and converted the actual BTC I took out to my hardware wallet… You just gave me confirmation that I did the right thing,” they wrote.

The decision to block WBTC trading may mark a turning point in the competition between decentralized Bitcoin solutions. While cbBTC's integration between multiple blockchain networks has come to the fore, doubts about WBTC's custodial model and leadership have grown.

Justin Sun criticized Coinbase's cbBTC strategy, calling it an obstacle to Bitcoin's wider adoption. As the debate continues, the industry will be watching closely to see if Coinbase's cbBTC consolidates its dominance or if WBTC can wrap up as a leader and find a solution to Bitcoin. Regardless, the dynamic changes reflect the importance of transparency, governance and community trust in shaping Defin's future.