The MakerDAO community has approved a proposal to cease issuing new loans backed by BitGo’s Wrapped Bitcoin (WBTC). This was reported by The Block.
The decision involves reducing the debt ceiling of the token to zero, effectively blocking any new borrowings using the asset as collateral.
The changes will not affect existing loans backed by WBTC, as the liquidation threshold remains unchanged.
The initiative was prompted by the decision of Wrapped Bitcoin’s issuer, the custodial platform BitGo, to expand the jurisdictions for storing the underlying Bitcoin token to Singapore and Hong Kong, as part of a partnership with BiT Global, a firm associated with the Tron Foundation.
BitGo will be a minority shareholder in the joint venture. Initially, the digital gold for token issuance was locked only in the United States.
The partners have pledged to maintain maximum transparency and continue providing real-time proof of reserves via their website.
The proposal to halt WBTC-backed loans was initiated by the risk management company BA Labs, which cited an “increased level of risk.” Experts noted that projects associated with Tron Foundation founder Justin Sun have faced operational and transparency issues.
In response, BitGo CEO Mike Belshe urged focusing on facts rather than the involvement of Tron and Sun. The executive emphasized that the underlying protocols of WBTC are not at risk. “They will remain the same as they are today,” he added.
Earlier, two days after the partnership news, cryptocurrency exchange Coinbase announced the launch of a product called cbBTC. Commentators speculated that this might be its own version of Wrapped Bitcoin.