2023-9-10 17:42 |
Coinbase is now offering up to a 5% interest rate on any USDC held on the exchange, up from the 4% introduced earlier in the year.
Based on historical data from the company’s website, the increase marks an impressive 150% bump from the 2% reward rate on USDC that was active as of June 9.
USDC safe from SEC scrutinyThe 2% reward rate was increased to 4% on June 15 after the SEC said in a filing in its case against Coinbase that it did not consider USDC — or any stablecoin —to be unregistered securities offerings. Thus any rewards offered for holding stablecoins does not violate current regulation.
However, staking rewards for cryptocurrencies were deemed unregistered securities offerings by the watchdog, which also blocked Coinbase’s planned Lend program in 2021 due to regulatory concerns.
The current USDC reward mechanism is funded directly by Coinbase and has evaded such concerns due to this divergence from other controversial programs like the Lend program — which intended to loan out users’ USDC to generate rewards.
USDC vs USDTCoinbase’s aggressive increments in the USDC reward rate highlight its intention to push for more stablecoin adoption, which has lagged significantly behind its rival Tether’s USDT in terms of market share in the past 12 months.
Circle CEO, Jeremy Allaire, cited regulatory crackdowns in the U.S. as a significant factor in USDC’s market capitalization dip. The stablecoin also faced challenges when $3.3 billion of its reserves became trapped at Silicon Valley Bank during the U.S. banking crisis, causing the stablecoin to detach from its dollar peg momentarily.
USDC’s market share hit a two-year low at the end of July — falling to 21.91% from a high of 33.27% before the crisis. Meanwhile, USDT climbed from 49.48% to 68.87% market share during the same period.
The stablecoin has struggled to regain the share it lost to USDT since the start of the year but has begun to show signs of momentum in recent weeks.
The post Coinbase raises USDC interest rate to 5% appeared first on CryptoSlate.
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