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- 1 Coinbase was offering a 2% interest rate as a reward on USDC holdings until June this year.
- 2 The recent increase in rewards to 5% marks an increase of 150% within the last three months.
- 3 This step from Coinbase may encourage USDC adoption and reignite the growth engine of stalling stablecoin.
Leading cryptocurrency exchange in the United States, Coinbase Global, brought up an update in favor of USD Coin (USDC). The crypto exchange was reported to offer up to 5% interest rates over the stablecoin holdings. The increase in rewards against the USDC holding from Coinbase was treated as the company’s efforts to bolster the crypto assets’ growth.
The interest rate on USDC stablecoin holding over Coinbase saw significant growth during this year. Earlier, the reward was at 2% until June 9, 2023. The company raised the interest rate to 4% following the SEC’s filing, alleging to offer unregistered securities, which excluded USD Coin (USDC) and other stablecoins.
By June 15, 2023, Coinbase doubled the interest rate to 4% from the previous reward of 2%. Following the recent increase, the USDC interest rate saw a 150% rise since its initial offering of 2%.
The United States Securities and Exchange Commission (SEC) filed a lawsuit against Coinbase alleging that the company was offering unregistered securities in June this year. The filing named several prominent cryptocurrencies as securities and cited their offerings as illegal operations.
However, the list of “unregistered securities” cryptocurrencies did not have USD Coin (USDC) in it. This opens an opportunity window for Coinbase to not only continue the reward offerings but also enable them to raise the rewards.
Coinbase’s Efforts to Pump Optimism in USDC
The crypto winter ended up affecting almost every other cryptocurrency across the global crypto market. Stablecoins like USD Coin (USDC) and Tether USDt (USDT) were no exception as they also lost their grounds in terms of market cap. The following situations, including this year’s bank run, also affected the stablecoins.
USDC was affected majorly after the incident as the second biggest cryptocurrency significantly lost its market share.
The top stablecoins in the crypto market—USDT and USDC—saw a widening gap in their market caps in 2022. By the end of July 2023, USDC’s market share stood at 21.9%. The number was lowest in the last two years as stablecoin stood at 33.27% share earlier.
During a similar time frame, however, the biggest stablecoin in the crypto market, USDT, got bigger. The market share of the stablecoin rose to 68.8% from 49.48%.
Chief executive officer at USDC issuer company Circle, Jeremy Allaire, argued the increased regulatory crackdowns over the crypto industry in the U.S. resulted in USDC losing the market cap.
Additionally, the stablecoin had another situation following the Silicon Valley Bank’s collapse during this year’s banking crisis in the country. As a result, about $3.3 Billion worth of USDC reserves were trapped in the bank which resulted in an immediate de-peg for a while.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
