- In light of the custody shift, MakerDAO is thinking of lowering WBTC vault ceilings to zero.
- BitGo intends to give BiT Global JV ownership of WBTC over the next sixty days.
- BitGo expands in after obtaining a MAS Major Payment Institution License.
Asia.In the midst of WBTC custody changes brought about by Justin Sun’s new position in the BitGo and BiT Global joint venture, MakerDAO assesses risk.
One of the leading companies in the decentralized finance (DeFi) space, MakerDAO, is evaluating how its risk management system may be affected by the impending Wrapped Bitcoin (WBTC) custody changes.
Owing to the recent announcement by BitGo, a significant WBTC custodian, that it will be handing over product control to a new joint venture with BiT Global, the governance-focused DAO has taken a more conservative stance.
MakerDAO Highlights Justin Sun’s Role at Risk
In order to reduce the risks associated with modifications to Wrapped Bitcoin custody, MakerDAO is taking a number of precautions. This evaluation comes after BitGo, the product’s existing custodian, provided an update on the operational jurisdictions and control transfer.
This shift is partially attributable to the Tron ecosystem’s cooperation with Justin Sun, who will now have some degree of authority and influence over the joint venture that will oversee WBTC. The community has voiced concerns because Sun has a history of being associated with other cryptocurrency initiatives, such as TUSD and Huobi’s USDT reserves, which had some issues with transparency and operations.
In light of these changes, the company is now thinking about ways to reduce risk for both its users and its platform. A fairly conservative view of the process is reflected in the governance efforts both off-chain and on-chain. Simultaneously, there is a proposal to drastically lower the company’s vault share.
This means that until the future of custodial frameworks is better understood, the debt ceilings for certain collateral integrations, such as WBTC-A, B, and C, may be set to zero.
There’s also a recommendation to reduce the LTV ratio to 0% and to stop borrowing products on SparkLend, another service associated with the company. These suggested measures demonstrate the firm’s efforts in this area and demonstrate the importance of risk management to DeFi. Nonetheless, the executive vote scheduled for next week is anticipated to make the final judgments.
BitGo’s Wrapped Bitcoin Custody Transition
In reaction to BitGo’s recent statement that ownership of the product will be transferred to a new joint venture with BiT Global, MakerDAO has responded. As part of this strategic shift, custody will no longer be domiciled in the United States but rather be shared across several jurisdictions, including Singapore and Hong Kong.
Within the following 60 days, the transition is anticipated to be completed, bringing about a significant alteration to WBTC’s operational environment.
The Monetary Authority of Singapore (MAS) has granted BitGo a Major Payment Institution License in accordance with these changes. In light of the operational reorganization, this approval greatly broadens BitGo’s regulated service offerings in Asia and enhances the company’s standing as a trustworthy supplier of DAM solutions.
In parallel, the price of wrapped bitcoin has seen a positive surge over the past day, fluctuating between an intraday high and low of $60,176.32 and $61,153.79, respectively. As of the time of publication, the price was trading at $60,960, up 0.90% from the support level.
Justin Sun Addresses Issues
In spite of the growing worries, Justin Sun clarified his relationship with WBTC on X. In his post, the founder of TRON admitted that he was unable to move any Bitcoin since he did not have authority over the private keys to the reserves.
Simultaneously, he declared that the WBTC remained unchanged, with Bitglobal and Bitgo serving as the custodians for the entire minting process.
Disclaimer : This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.
