Coinbase is encouraging peple to hold USDC by increasing their interest rates for doing so. From June 2020 till now, Coinbase has raised the interest rate for holders of USDC by 2500%.
Coinbase has come up with a product targeted at those who would like to save money in their bank accounts. Instead of saving fiat, Coinbase is attracting such people to save USDC with a reward rate of 4% APY.
Coinbase announced this yesterday on its blog. The exchange is interested in those going to the banks by saying what they offer isn’t comparable to what the banks give.
Coinbase, with its offer, is in the middle of two options. Choosing its offering makes one richer than another who would go to the bank for an interest rate of 1% but the problem is that those who choose Coinbase over the bank accounts won’t get the backing of the Federal Deposit Insurance Corporation. Another protection bank account holders enjoy but absent from Coinbase’s offer is the Securities Investor Protection Corporation. On the other hand, Coinbase’s interest may not be considered by all because it is just a fraction of what many crypto platforms offer their investors, which is usually 2× or more of Coinbase’s offer. Coinbase, however, encouraged investors not to be deceived by the higher interest rates because many of them do not guarantee the return of investors’ funds.
Coinbase first offered 1.25% for USDC holdings between October last two years and June last year when it informed its clients that the interest would be 0.15%. This present reward of 4% is an indication that Coinbase will be raising the interest of USDC holders by over 2,500%.
USDC is among the top ten cryptocurrencies having a market cap of $25 billion. The most widely used stablecoin is still USDT, which has a market cap of $62.5 billion, making it the third largest presently in the crypto market.
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