'Every Major Bank Is Going To Launch A Stablecoin'—Spark Taps BitGo

Spark, a decentralized finance (DeFi) protocol and sub-DAO of Sky (formerly MakerDAO), has partnered with BitGo, the largest independent digital asset custodian, to let institutional clients earn yield on stablecoins held in custody. The integration enables users to access Spark Savings directly through BitGo, eliminating the need to move funds out of regulated custody—a common compliance hurdle for large investors. Spark’s USDS stablecoin, the third-largest by market cap at $8.7 billion, powers the product, which offers near-instant withdrawals with high liquidity reserves (50-60% cash backing). The collaboration targets institutional clients frustrated by low returns on idle stablecoin balances, such as USDC or USDT, which traditionally earn no yield in custodial accounts. Sam MacPherson, Spark’s CEO, highlighted the cost of holding unproductive funds, citing a $3.6 million annual loss for a $100 million USDC balance at a 3.6% treasury rate. BitGo, which manages over $104 billion in assets for 1,500+ clients, will now offer Spark’s yield-generating solution without requiring fund transfers. Spark’s model mimics traditional banking but with DeFi efficiency. Unlike banks, which pay little to no interest on deposits, Spark routes funds into Treasury bills, crypto-backed loans, and off-chain Bitcoin lending via Anchorage Digital Bank—a federally chartered custodian. The protocol maintains high liquidity to support instant withdrawals, a feature rare in DeFi. MacPherson emphasized the product’s design as a ‘treasury tool,’ not a speculative yield farm, aligning with institutional risk preferences. The partnership follows Sky’s 2022 rebranding from MakerDAO, where Spark emerged as the first commercial sub-DAO focused on lending and credit. Its $6.4 billion Savings product and $3.4 billion SparkLend market reflect strong adoption, while USDS’s $8.7 billion market cap underscores its role as a leading stablecoin. The BitGo integration expands Spark’s reach to regulated custodians, bridging DeFi’s yield opportunities with institutional compliance requirements. In February, Spark also launched Spark Prime, a lending platform targeting prime borrowers, further diversifying its yield sources. The protocol’s focus on transparency and liquidity positions it as a viable alternative to traditional finance for asset managers seeking stablecoin yields without operational friction.