As per the latest reports, Coinbase has made yet another announcement for its users and the cryptocurrency community. Coinbase, one of the largest cryptocurrency exchanges in the world based in the United States has announced a new way of earning interest through its services.
The announcement that Coinbase has made is in regards to the holdings for USD Coin. The company has announced that now, Coinbase users have the option of earning interests through the Coinbase account just like a savings account.
The announcement in regards to the launch of the new interest-earning utility has been made by Coinbase on Tuesday, June 29, 2021. The cryptocurrency exchange has revealed that the users will be able to earn up to a 4% annual percentage on interest for their USD Coin (USDC) holdings.
The interesting feature would work the same way as the savings account, where the users would lend out their USDC holdings to the exchange. Later, USDC, which is a stablecoin pegged with the United States dollar will be used by the exchange for investments. The users will be receiving up to 4% interest on their holdings for the USDC on their accounts.
According to many analysts, by offering this service, Coinbase is targeting traditional banking solutions. At present, the banking solutions offer customers savings accounts where they are able to earn interests based on their savings.
However, the annual percentage yield (APY) that the banks offer is comparably lower than what Coinbase is offering the users.
So far, Coinbase has earned a lot of reputation both in the cryptocurrency community as well as the mainstream industry. Therefore, it has a lot of advantages when offering such services to users and then expects a high influx of investors.
As the world is moving towards digital adoption, the cryptocurrency industry has started gaining a lot of ground in the mainstream industry. It is attracting a tremendous amount of user base on a daily basis, which is the reason why it is now challenging mainstream financial institutions.
Coinbase has also provided clarity around the loaned USDC that it is going to use for investments from the investors. The firm has clarified that the Federal Deposit Insurance Corporation does not protect the USDC. The firm has also confirmed that another corporation going by the name Securities Investor Protection Corporation does not protect the USDC either.
The firm has also clarified that it is not something that is similar to having a savings account, something that the typical banks provide. However, the exchange has no control over how the users and investors perceive the interest benefit that it offers.