On Thursday, April 20th, cryptocurrency lending protocol MakerDAO voted 29-4 to move up to $500 million in USDC to Coinbase. The exchange’s custodial arm will pay a 2.6% annual yield on the deposit. The vote is the latest move in MakerDAO’s long-standing relationship with Brian Armstrong’s company.
MakerDAO Votes to Move Up to $500 Million USDC to Coinbase
This Thursday, MakerDAO voted in favor of moving up to $500 million in USDC to Coinbase’s custodial arm. The DAO will be receiving a 2.6% annual yield on the deposit and will be able to withdraw the funds after 24 hours. The vote ended with a landslide victory for the proposal with 29 out of 33 voters—or 84.05% of MKR—in favor.
The vote is the latest development in Maker’s earlier plan to move a significant portion of its Peg Stability Module (PSM) worth $1.6 billion to Coinbase’s custody. At the time, the idea was pitched as a way to take advantage of the exchange’s reward program and thus increase the DAO’s revenue.
Since its inception, the moving of USDC to Coinbase’s custody reward program has been a hotly contested topic with some fearing that it would simply “add yet another regulatory attack vector that the DAO needs to worry about”. The comment was lent some additional credence in recent months after the cryptocurrency exchange received a Wells notice from the SEC signaling it is under a regulatory probe.
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MakerDAO Remains Committed to Coinbase Partnership
MakerDAO has maintained a long-standing working relationship with Coinbase and generally views the cryptocurrency exchange as a reliable partner due to it being “an established, reputable, and regulated company”. The commitment extends to USDC, a stablecoin jointly issued by Brian Armstrong’s exchange and Circle.
The partnership went through a major test in the second half of March as USDC suffered from a dramatic depeg in the wake of the collapse of Silicon Valley Bank—an important partner of Circle, the stablecoin’s issuer. At the time, Maker initiated a vote on whether to keep its reserves in USDC and vote in favor of continuing the partnership with 79% of the votes being in favor.
Similarly, today’s result again shows Maker’s faith in Coinbase despite the turbulence the exchange is facing. Not only was it recently warned that the SEC is considering an enforcement action against it, but the exchange is itself considering a significant change in strategy and even a shift from the US due to regulatory uncertainty in the country.
Do you think MakerDAO is making the right call with its decision to move $500 million to Coinbase’s custody? Let us know in the comments below.
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