Coinbase raises USDC interest rate to 5% Coinbase raises USDC interest rate to 5%
The increase marks an impressive 150% bump from the 2% reward rate on USDC that was active as of June 9, based on historical data from the company's website.
2 min read
Updated: Sep. 10, 2023 at 3:44 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
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 scrutiny
The 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 USDT
Coinbase’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.
Mentioned in this article
Author 
Assad Jafri
AJ, a passionate journalist since Yemen's 2011 Arab Spring, has honed his skills worldwide for over a decade. Specializing in financial journalism, he now focuses on crypto reporting.
Latest USDC Stories
Featured Story
Advertise Here
In this article
USD Coin
$0.99990
USD Coin (USDC) is a stablecoin fully backed by the US dollar and developed by the CENTRE consortium.
Coinbase
Coinbase is a digital currency exchange and wallet service that allows individuals to buy, sell, and store digital currencies, such as Bitcoin, Ethereum, and Litecoin.
Circle
Circle Internet Financial Ltd is a global internet finance company, built on blockchain technology and powered by crypto assets.
Tether Limited
Tether Limited is the company that introduced Tether (USD₮ or USDT), an asset-backed cryptocurrency stablecoin, in 2014.