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ETF issuer 21Shares’ parent company on Tuesday announced the launch of its own “wrapped” Bitcoin token on the Ethereum blockchain.

21.co said that its latest product— dubbed 21BTC—aimed to “usher in the next phase of decentralized finance (DeFi) and to help enable DeFi’s broader adoption.”

You may have heard of “wrapped Bitcoin” and wrapped tokens—how do they work?

A wrapped token allows one cryptocurrency to be used on another blockchain. The biggest example is Wrapped Bitcoin (WBTC) , the 14th largest cryptocurrency, with a market cap of $8.8 billion. Meant to represent Bitcoin, it runs on Ethereum , the second biggest crypto network and the hotspot for DeFi and NFTs .

WBTC allows traders who want to use their Bitcoin holdings in the Ethereum ecosystem to do so with tokens that are one-to-one backed by Bitcoin. It’s how Bitcoin holders can interact with DeFi tools without spending more money on Ethereum or other Ethereum-based tokens.

The token is an important tool in the world of DeFi —crypto products that allow their users to borrow, lend, or trade digital assets without third-party intermediaries. In the past 24 hours, over $127 million in WBTC tokens traded hands , according to CoinGecko .

Other entities have cottoned on and are releasing their own institutionally backed versions of tokens—including 21.co’s announcement today.

“21BTC offers the ability for users to make use of Bitcoin’s liquidity, but on the Ethereum DeFi ecosystem,” 21Shares Head of Strategy and Business Development, Digital Assets Eliézer Ndinga told Decrypt . “This is of vital importance for various DeFi applications from lending platforms to decentralized exchanges.”

But the wrapped Bitcoin craze isn’t without controversy: BitGo, WBTC’s custodian, announced last month it was teaming with Hong Kong-based BiT Global to “diversify custody operations and cold storage across multiple jurisdictions” for the token.

The move attracted some criticism because of BiT Global’s ties to crypto entrepreneur Justin Sun. Bitcoin DeFi protocol Threshold—which mints a Bitcoin-wrapped token, tBTC—even proposed a merger with WBTC to “save” it.

Sun spoke out about the controversy last month and said his involvement was “entirely strategic.”

And America’s biggest crypto exchange, Coinbase, last month said it would launch a tokenized version of Bitcoin, cbBTC, on its Base network.

Regardless of the controversy, one thing is certain: there is demand for the biggest digital asset by market cap on other blockchains, and well-established firms like 21.co are eager to join the fray.

Editor's note: This story was updated after publication to clarify attribution for a comment.