Coinbase raised the USDC interest rate to 5%
Date: 2023-09-11 Author: Karina Ziganova Categories: BLOCKCHAIN
Coinbase now offers an interest rate of up to 5% on any USDC held on the exchange, up from 4% introduced earlier this year.
Based on historical data from the company's website, the increase is a significant increase of 150% compared to the 2% USDC deposit reward rate that was active until June 9.
USDC is protected from SEC scrutiny
Thanks to the SEC's announcement, Coinbase's 2% reward rate was raised to 4% in early June. This happened three days after the company announced that USDC was not a value proposition. As a result, any rewards for storing stablecoins do not violate current regulations.
But staking rewards for cryptocurrencies were deemed unregistered securities offerings by regulators, who also blocked Coinbase's planned lending program in 2021 due to regulatory concerns.
This current USDC reward mechanism is funded directly by Coinbase and has avoided such concerns due to this discrepancy with other controversial programs such as Lend, which was intended to provide customers with cash.
USDC vs USDT
Coinbase's threatening USDC reward rate hike reinforces its determination to increase the adoption of stablecoins, which have lagged its main rival Tether significantly in terms of market share over the past 12 months.
Regulatory crackdowns in the US are a major factor in the decline in USDC's market capitalization, said Circle CEO Jeremy Allaire. The stablecoin also experienced problems when $3.3 billion of its reserves became trapped by Silicon Valley Bank during the US financial crisis and the stablecoin came out of its peg to the currency a couple of moments early.
USDC market share hit a two-year low at the end of July, falling to 21.91% from a high of 33.27% just before the crisis and falling almost two years down from a peak of 23% a month earlier. However, the market share of USDT over the same period of time increased from 49.48% to 68.87%.
Stablecoin has been struggling to regain the share it has lost in USDT since the start of the year and has already begun to show signs of momentum.
