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Coinbase Reduces Interest Received by USDC Holders by 90%

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Coinbase Reduces Interest Received by USDC Holders by 90%


A considerable reduction interest rate

In a mail addressed to its American customers, the Coinbase exchange announced the significant drop in the annual interest rate that USDC holders received. Passing 1.25% to 0.15%, the rate drop is almost 90%.

Introduced in October 2019, this new feature offered an added advantage of owning the USDC over another stablecoin on Coinbase. Already in the shadow of Tether (USDT), it becomes much less interesting than before to have USDC.

Coinbase did not specify the reason for this decision, but the new rate is now more in line with what traditional finance offers in the United States.

The interest rate is always better than the biggest local banks. For the same conditions as those of Coinbase for the USDC Rewards, the banks Well Fargo, HSBC and Bank of America “offer” for example a very low rate of 0.01%.

However, on the FinTech business side, Coinbase is now well below their offers. With between 1% and 1.50% annual interest rates, Nationwide, Bank7 and UFB Direct are now much more attractive than Coinbase while remaining in traditional finance.

👉 To go further: Coinbase’s USD Coin (USDC) conquers the Tether market

Other offers for USDC holders

Although this decision diminishes the interest of owning this particular stablecoin, it is still possible to send your USDC to other platforms that offer much higher interest rates :

These numerous options were also already available long before the rate reduction by Coinbase was effective. In addition, they are not reserved for American customers, as is the offer from Coinbase.

In itself, the holders of USDC on Coinbase will always be rewarded, but this consequent decrease should convince many people to migrate their assets to other platforms.

In the long term, this decision will have a negative impact certain about the overall capitalization of the USDC. Its eminence in the market coming mainly from Coinbase, the virtual loss of this advantage could cause it harm.

In addition, with very many stablecoins already on the market and always offering more use cases, the USDC could be likely to lose its place of eternal second in favor of the BUSD from Binance or from TUSD from TrustToken.

👉 To read on the same subject: The total value of stablecoins now exceeds $ 10 billion

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About the Author : Clement Wardzala

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Since 2017, I have been interested in Bitcoin, cryptocurrencies and associated blockchain technology. I firmly believe in these technological innovations and that they are already revolutionizing many sectors.
All articles by Clément Wardzala.





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