Circle Internet’s (CRCL) wrapped version of bitcoin cirBTC, is live on Ethereum as the company best known for its dollar-denominated stablecoin takes on Coinbase (COIN) for dominance of the synthetic BTC market.
The New York-based company said it developed cirBTC, a token backed 1:1 by the world’s largest cryptocurrency, to allow traders to access their bitcoin wealth in decentralized finance (DeFi) protocols, including lending, decentralized exchanges (DEXs), tokenized assets and stablecoins.
Synthetic or wrapped bitcoin tokens exist to address the historical lack of determination of DeFi activities on the Bitcoin network. Many cryptocurrency users prefer to hold only bitcoin because it is worth more than every other crypto combined. But using it for DeFi is challenging because Bitcoin lacks the native programmability of networks like Ethereum.
The first token to cross the divide, wrapped bitcoin (wBTC), was introduced in 2019 and remains the largest with a market cap of around $7.3 billion. Coinbase’s (COIN) cbBTC, which emerged in 2024, is at just under $5.4 billion.
Circle is pitching cirBTC to institutions that can focus their crypto allocation on BTC and are familiar with the company and trust its infrastructure due to its visibility in the stablecoin market. Circle’s USDC is the second largest stablecoin in the market with a cap of over $75 billion.
The introduction of cirBTC could see Circle go head-to-head with Coinbase and wBTC’s primary custodian, BitGo Holdings (BTGO), for dominance of the institutional synthetic BTC market.
The market capitalization of all synthetic bitcoin tokens combined fluctuates between $12.5 billion and $13.5 billion, representing about 1% of bitcoin’s total value of about $1.25 trillion.
