Circle Internet’s (CRCL) wrapped version of bitcoin cirBTC, is available on Ethereum as the company best known for its dollar-pegged stablecoin takes on Coinbase (COIN) for dominance of the synthetic BTC market.
The New York-based firm said it developed cirBTC, a token backed 1:1 by the world’s largest cryptocurrency, to allow traders to access their bitcoin wealth on decentralized finance (DeFi) protocols, including lending, decentralized exchanges (DEX), tokenized assets and stablecoins.
Synthetic or wrapped bitcoin tokens exist to address the historical lack of provision for DeFi activities on the Bitcoin network. Many cryptocurrency users prefer to hold only bitcoins because they are worth more than any other cryptocurrency 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 capitalization of around $7.3 billion. Coinbase’s cbBTC (COIN), which appeared in 2024, sits at just under $5.4 billion.
Circle is offering cirBTC to institutions that can focus their cryptocurrency allocation on BTC and that are familiar with the company and trust its infrastructure due to its visibility in the stablecoin market. Circle USDC is the second largest stablecoin on 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 ranges between $12.5 billion and $13.5 billion, representing approximately 1% of bitcoin’s total value of around $1.25 trillion.
