According to a Sept. 3 statement, 21.co, the parent company of 21Shares, has introduced its Wrapped Bitcoin product (21BTC) on the Ethereum blockchain.
The company stated that it was collaborating with Flow Traders, a leading global market maker, to launch a product that would give customers “peace of mind as they explore decentralized applications and new opportunities on the Ethereum blockchain.”
21.co’s 21BTC aims to differ from competing products in the market because it securely stores the underlying assets in cold storage, eliminating the need for a bridge.
Eliezer Ndinga, head of strategy and business development at 21.co, stated:
“As one of the world’s largest issuers of crypto ETPs, we bring stringent asset management best practices and our operational excellence to the world of wrapped assets, involving institutional-grade custodians and security protocols.”
Bitcoin wrappers are ERC-20 tokens backed by BTC, issued on various blockchains, backed one-to-one by BTC, and held by a centralized custodian. To redeem, holders burn the tokens to receive native BTC, while minting involves depositing native Bitcoin to receive the tokens.
WBTC faces struggles
The launch of 21BTC coincides with challenges faced by WBTC, the most popular Bitcoin wrapper with a market capitalization of approximately $9 billion.
Over the past month, WBTC has been under increased scrutiny due to issues involving BitGo and TRON founder Justin Sun. On Aug. 9, BitGo announced plans to transfer control of WBTC to a joint venture with crypto custody platform BiT Global and Sun.
This announcement raised concerns within the community, particularly about Sun’s involvement in the project.
In response, the lending protocol Sky (formerly MakerDAO) voted to stop new users from borrowing against WBTC, and demand for the asset declined. Dune Analytics data shows that WBTC’s supply decreased by over 1,000 tokens last month, marking the third-highest monthly negative change this year.
In light of these developments, several competitors, including Coinbase, are seeking to challenge BitGo’s market dominance. Further, DeFi protocol Threshold has proposed merging its BTC “wrapper” token, tBTC, with WBTC in an effort to save the more popular BTC product.
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