21.co Introduces Bitcoin Wrapper on Ethereum

The rollout aims to enhance the security of wrapped Bitcoin (BTC) for institutional investors and users alike.

Overview of the Initiative

21.co, the parent company of cryptocurrency asset manager 21Shares, has launched a new Bitcoin wrapper known as 21.co Wrapped Bitcoin (21BTC) on the Ethereum blockchain. This announcement was made on September 3.

The introduction of 21BTC expands 21.co’s existing collection of wrapped tokens on Ethereum, which already includes:

• Wrapped Avalanche (AVAX)
• Wrapped Polkadot (DOT)
• Wrapped Solana (SOL)

The 21BTC wrapper initially launched on the Solana blockchain in May.

Security Features and Partnerships

The primary objective of the BTC wrapper is to implement stringent asset management practices, ensuring security measures like:

• Utilization of institutional-grade custodians
• Advanced security protocols

According to Eliezer Ndinga, head of strategy and business development at 21.co, user protections will include cold storage and collaboration with regulated third-party custodians. The company has partnered with Flow Trader to oversee the issuance of 21BTC. Wrapped Bitcoin is typically categorized as ERC-20 tokens or other smart contract-compatible types, and these tokens are fundamentally backed by BTC.

Market Context

This announcement comes at a time when the existing BTC wrapper, WBTC, is experiencing criticism regarding its custodian, BitGo. BitGo’s intention to partner with BiT Global will allow the Hong Kong-based exchange to hold a partial custody of the WBTC’s Bitcoin backing. Currently, WBTC is the leading Bitcoin wrapper with a market capitalization of nearly $9 billion.

The controversial nature of BitGo’s announcement has ignited concerns within the community, especially related to Justin Sun and his associated projects, as expressed by the decentralized finance (DeFi) protocol Threshold in a recent governance proposal.

About 21.co

21.co is primarily recognized for its subsidiary, 21Shares, which is involved in the issuance of cryptocurrency exchange-traded funds (ETFs), such as the ARK 21Shares Bitcoin ETF (ARKB) and the 21Shares Core Ethereum ETF (CETH).

The introduction of wrapped BTC facilitates a significant source of collateral, enabling various financial applications including lending, borrowing, and trading. Flow Trader’s global head of digital assets, Michael Lie, noted that 21.co’s wrapped BTC improves liquidity and enhances interoperability across different blockchain networks.