Popular United States-based cryptocurrency exchange Coinbase announced in a blog post today that users holding the USDC stablecoin on their platform will earn a 1.25% annual percentage yield (APY).
As per the announcement, the rewards on the USDC holdings will be paid out monthly to eligible U.S customers which for regulatory reasons does not include New York residents. Users will also not have to engage in any trading activity to earn the rewards with the only requirement being to store USDC on Coinbase.
However, the exchange was quick to point out in the release that they are not a depository institution for the stablecoin, which is labelled as just a digital currency backed by a reserve asset.
Coinbase also noted that users USDC deposits would not be protected by the Federal Deposit Insurance Corporation or the Securities Investor Protection Corporation since the digital currency is not a legal tender.
Notably, the new incentive program rolled out by Coinbase comes just a few days after the company celebrated the first anniversary of the stablecoin which they launched alongside a consortium of other crypto companies.
Paying an interest rate on the stablecoin is apparently a move designed to encourage customers to further use USDC which has in just one year of existence become the second most popular stablecoin with over 1 billion tokens issued.
The latest development also continues Coinbase’s expansion to offer services beyond the cryptocurrency trading platform for which it achieved prominence. In a recent report, we confirmed that the San Francisco-headquartered business is looking to launch its initial exchange offering (IEO) platform designed to help crypto projects raise funding for their products.