Coinbase Increases Interest Rates on USDC Holdings to 5%
Coinbase, the San Francisco-based crypto exchange, has raised the interest rates on USD Coin (USDC) holdings to 5%. This comes just a few months after a previous increase that doubled the stablecoin’s annual percentage yield from 2% to 4%. The decision to raise the interest rates is in line with regulatory compliance, as the U.S. Security and Exchange Commission (SEC) has deemed stablecoins like USDC to be non-securities.
While Coinbase’s reward rates are subject to change, some users have reported seeing the new interest rates in their accounts. It is speculated that this move may be an effort by Coinbase to increase adoption of USDC, which lags behind its rival stablecoin, Tether (USDT). Tether currently dominates the stablecoin sector with a market capitalization of $83.8 billion, while USDC has a market cap of $26.15 billion.
Hot Take:
Coinbase’s decision to raise interest rates on USDC holdings to 5% demonstrates their commitment to boosting adoption of the stablecoin. By offering competitive rewards, Coinbase aims to attract more users and strengthen USDC’s position in the market. While USDC has faced challenges in 2023, including a temporary detachment from its dollar peg, Circle CEO Jeremy Allaire remains optimistic about its growth potential. Coinbase’s recent acquisition of a stake in Circle further indicates their dedication to the success of USDC. With these strategic moves, Coinbase is positioning itself as a major player in the stablecoin sector.
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