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Leading cryptocurrency exchange Coinbase is providing a 1.25% annualized interest rate for holders storing USD Coin (USDC) on its platform.
As per its announcement, the annual percentage yield rewards will be distributed on a monthly basis, and eligible clients will earn interest without having to sell or transact any cryptocurrency.
Furthermore, the percentage rate is the same regardless of the balance. It will also be earned automatically with no additional costs or fees.
Coinbase also said the rewards accrue daily, so USDC holders will still have total control of their digital assets all the time. However, the rewards will not be available for clients in New York State.
“We’re trying to build more ways for customers to grow their wealth on Coinbase,” Paul Katsen, Coinbase Product Manager, said as quoted by CoinDesk. “One of the things we know is a bad customer experience is having to move your money back and forth from Coinbase to a bank account [to] earn a little bit of interest in the bank account. We’re trying to bring some of these experiences together but make them crypto-first and on Coinbase.”
The exchange also made clear that USDC is not a legal tender and is not insured by the Federal Deposit Insurance Corporation (FDIC) or the Securities Investor Protection Corporation (SIPC).
Meanwhile, Max Branzburg, Coinbase Product Director, explained that the company will obtain various pre-existing revenue streams to finance the initiative, including the exchange’s custody business, treasury management, and investments.
“We can pull from the profits we generate as a business to reward our customers for storing their assets on the platform,” he said.
Last month, the exchange announced that it is considering adding support to a range of new assets, particularly on those that “have not launched and which Coinbase may choose to support in the future.” Some of the digital assets Coinbase is exploring include Kadena, NEAR, Nervos, and Telegram.
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