Coinbase, one of the leading cryptocurrency exchanges, has officially unveiled its wrapped Bitcoin token, cbBTC, available on Ethereum and Base.
Announced on September 12, cbBTC is tied to Bitcoin with a 1:1 backing, meaning each cbBTC token is fully collateralized by an equivalent amount of Bitcoin held by Coinbase.
It won't have its own trading pairs or order books on Coinbase.
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The mechanics behind this wrapped Bitcoin are simple: users can mint cbBTC by sending Bitcoin to an Ethereum or Base address. The process works in reverse as well—when cbBTC is sent to a Coinbase address, it is automatically redeemed for traditional Bitcoin.
The purpose of tokenizing Bitcoin is to open up decentralized finance (DeFi) functionalities for the cryptocurrency, which is often seen as limited in this space. For example, with cbBTC, people can use their Bitcoin as collateral for loans or lend it to earn interest.
At launch, cbBTC will be integrated with several DeFi platforms such as Aave, Compound Finance, Morpho, Spark, and Moonwell, among others. Coinbase is eyeing future expansions to additional blockchains and ecosystems; however, no specific timelines or details were provided in the initial announcement.
This move represents another step toward increasing Bitcoin's presence in the DeFi space, providing more ways for users to utilize their Bitcoin holdings.
In other news, Coinbase is facing a lawsuit from the US Securities and Exchange Commission, which accused the crypto exchange of breaking federal securities laws. Recently, Coinbase asked to review SEC Chair Gary Gensler's private emails, a move the SEC is pushing back against.
