Coinbase Delists Wrapped Bitcoin (WBTC) Amidst BitGo Controversy

Coinbase announced it will suspend trading of Wrapped Bitcoin — WBTC — on December 19, 2024, across all its platforms, including Coinbase.com and Coinbase Prime.

Coinbase will delist Wrapped Bitcoin (WBTC) on December 19, 2024, the exchange announced on Friday. The decision follows a routine asset review and will shift WBTC order books to limit-only mode, Coinbase said in a statement to Axios.

"We regularly monitor the assets on our exchange to ensure they meet our listing standards," Coinbase stated. "Based on our most recent review, Coinbase will suspend trading for wBTC (wBTC) on December 19, 2024, on or around 12pm ET."

Launched in 2019, WBTC enables Bitcoin liquidity to flow into decentralized finance (DeFi) ecosystems by tokenizing Bitcoin (BTC). The token is pegged 1:1 with Bitcoin and boasts a market cap exceeding $13.6 billion.

Its primary custodian, BitGo has traditionally maintained the underlying Bitcoin reserves. But recent shifts in the governance of the WBTC protocol have sparked industry concerns.

In August, BitGo announced a joint venture with BiTGlobal, a Hong Kong-based trust company linked to TRON founder Justin Sun. The partnership, aimed at increasing geographical decentralization, has led to scrutiny over Sun's growing influence in the protocol.

Crypto projects are already adjusting their interactions with WBTC due to potential governance risks.

Coinbase's move also coincides with the growth of its own tokenized Bitcoin product, cbBTC, which was launched earlier this year. With a $1.5 billion market cap, cbBTC is gaining traction as a competitor in the wrapped Bitcoin market.

The team behind WBTC expressed surprise and disappointment over Coinbase's decision to delist the asset on Friday.

"We are surprised and disappointed by Coinbase’s decision to eventually delist WBTC," the WBTC team told Axios in a statement. "As the core team behind Wrapped BTC, we have always been committed to providing the community with the most compliant, transparent, and decentralized BTC tokenization product."

Highlighting their product's rigorous governance, secure custody processes, and regulatory adherence, the WBTC team underscored WBTC's status as "the most decentralized wrapped BTC solution on the market."

"We urge Coinbase to reconsider this decision and would be happy to provide them with any additional information or clarification they may need," the WBTC team added.