Coinbase to Pay US Users Interest for Holding USDC Stablecoin

Published at: Oct. 2, 2019

Major United States-based cryptocurrency exchange and wallet service Coinbase now allows holders of USD Coin (USDC) to earn a 1.25% annual percentage yield (APY).

In a blog post on Oct. 2, Coinbase said that eligible U.S. customers will begin earning 1.25% APY rewards on every USDC they hold on Coinbase with rewards being distributed on a monthly basis. Interest earning is not available for customers in New York state.

In the announcement, Coinbase described USD Coin as a stablecoin that offers price stability by being backed by a reserve asset. USDC was created by CENTRE, the Coinbase co-founded consortium that has issued over one billion USD Coins as of early August 2019.

No transactions needed to earn USDC rewards

According to the statement, Coinbase customers will be able to earn a return on their USD Coin holdings without having to sell or transact any cryptocurrency. 

Coinbase said that USDC is not legal tender but a digital currency. The company added that it is not a depository institution for USDC and that customers’ wallets are not protected by the Federal Deposit Insurance Corporation or the Securities Investor Protection Corporation.

At press time, USDC is the 23rd largest cryptocurrency by market capitalization of around $452 million. 

Meanwhile, Tether (USDT), the biggest stablecoin by market cap, has recently overtaken Bitcoin Cash (BCH) and Litecoin (LTC), taking the position of the fourth-largest cryptocurrency by market cap after Bitcoin (BTC), Ether (ETH) and XRP.

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