Coinbase Boosts USDC Interest Rate to 5% Amid Stablecoin Market Tussle

Coinbase, a leading San Francisco-based cryptocurrency exchange, has announced a boost to its USDC interest rates, taking them to a generous 5%. This comes as a notable shift from the 4% rate established earlier this year.

This enhancement in rewards for holding USD Coin (USDC) follows the U.S. Securities and Exchange Commission’s (SEC) recent clarification that stablecoins, such as USDC, do not fall under the category of unregistered securities offerings.

Coinbase’s interest rates on stablecoins, as with many platforms, can be dynamic. Although the official USDC page on Coinbase hasn’t reflected the update, some users have already noticed the change in their accounts. A user, identified as “The Utility Bull,” even shared a screenshot highlighting the increment.

XRP may be headed for $130 says XRP Captain.
— Whale (@WhaleChart) September 10, 2023

USDC’s Struggle in the Stablecoin Arena

As per recent market data, it seems that USDC is trailing behind its main rival, Tether (USDT). Tether commands a dominant presence with a market cap hovering around $83 billion and boasting a market dominance of 67.3%. In contrast, USDC is currently valued at $26.15 billion, constituting 22.19% of the stablecoin market, as per CoinGecko data.

USDC faced headwinds in 2023. A significant setback was the temporary freezing of $3.3 billion of its reserves at the Silicon Valley Bank, which faced turmoil earlier this year. This incident caused a temporary deviation of the stablecoin from its dollar peg.

However, Jeremy Allaire, CEO of Circle, remains optimistic about USDC’s trajectory. He indicates that the stablecoin might be on the verge of a resurgence, particularly given the recent restructuring: Coinbase has acquired a stake in Circle, leading to the dissolution of the Center consortium, which was formerly at the helm of USDC’s management.

Coinbase has recently made changes to their interest rates for $USDC.

They are now offering a 5% APY on $USDC holdings.

This move by @Coinbase aims to provide users with a competitive interest rate option for their stablecoin investments and savings.#coinbase #APY #USDC… pic.twitter.com/Ng5YMJ2dYd
— The Utility Bull (@TheUtilityBull) September 10, 2023

The heightened interest rate may well be an aggressive move by Coinbase to push for more USDC adoption, taking on its fiercest competitor, USDT. Only time will reveal the outcome of this strategic play in the ever-evolving crypto landscape.

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