American crypto exchange Coinbase is offering yields on USDC stablecoins for its global customers. However, the move comes amid a lawsuit from U.S. financial regulators which want to crack down on such services.
On June 16, the company announced that Global Coinbase customers can now earn 4% rewards on Circle’s USDC stablecoin. Circle is a Coinbase partner, which explains why it is actively pushing USDC adoption.
Coinbase USDC Beats Bank Yields
Coinbase stated that the rewards rate is subject to change and can vary. It added that customers of its global exchange would be able to see the latest applicable rates directly within their accounts.
According to the firm’s FAQ page, USDC rewards were available for eligible customers in the United States.
The 4% yield is way above the Federal Deposit Insurance Corporation (FDIC) national average for savings accounts which is a miserly 0.4%. However, several U.S. banks are offering interest rates in excess of 4% following multiple rate hikes by the Federal Reserve.
Nevertheless, Coinbase has previously been in hot water with regulators over its yield products as the SEC considers the assets as securities.
In September 2021, the SEC warned the firm over its Lend products that allowed customers to earn interest on their crypto holdings.
The SEC has also cracked down on staking services targeting several exchanges in the U.S., including Kraken, which was forced to shutter staking.
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Last week, staked Ethereum redemptions spiked on Coinbase as rattled investors got cold feet following the SEC lawsuit last week. Coinbase CEO Brian Armstrong said, “We’re not going to wind down our staking service,” following the SEC action.
The regulator sued the company claiming that it had violated securities laws. Coinbase has repeatedly requested regulatory clarity, but SEC Chair Gary Gensler and his team of enforcement agents are not playing ball.
USDC Supply Slumps
The move to increase USDC adoption comes amid a massive slump in the stablecoin’s supply. The U.S. war on crypto has been partially blamed for the USDC decline and driving investment offshore to rival stablecoin issuer Tether.
USDC supply has fallen to a 22-month low of 28.2 billion. It has seen a supply shrink of 36% this year as its market share dwindles to 22%. Conversely, Tether supply has hit an all-time high of over 83 billion USDT this week.
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