Coinbase to Start Offering 4% Yield on USDC
The new savings product is aiming to compete with other crypto interest accounts.
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Coinbase will launch a new savings product on its platform offering 4% APY on USDC.
Coinbase Rolls Out 4% Yield
Coinbase is offering 4% yield on USDC through its new savings product, the exchange announced Tuesday.
In the announcement, the company states users can now pre-enroll for the offering, earning interest on “select assets, starting with 4% APY on USD Coin”. Coinbase also advertises that the 4% offered is 8x the national average for high-yield savings accounts.
While 4% is much more than a retail investor can expect to earn from traditional banks, Coinbase will need to compete with other crypto interest account providers. BlockFi, a leading competitor, is currently offering 8.6% APY on USDC deposits.
Thorsten Jaeckel, senior product manager at Coinbase, commented on the announcement, explaining that the comparatively lower yield is because the company doesn’t lend to “unidentified third parties.” However, deposits in the new accounts won’t be FDIC or SIPC insured. Despite this, Coinbase offers a guarantee that USDC savings are secure, advertising that the accounts have “higher interest without higher risk.”
Coinbase’s announcement follows similar news from DeFi blue chip Compound. Offering similar 4% interest rates, the protocol’s new Treasury Accounts were well received, with the native token soaring 23.4% in response to the news.
While the exchange’s new accounts will undoubtedly attract attention, the service is currently only available to U.S. residents, excluding those in New York and Hawaii.
Disclosure: At the time of writing, the author of this feature held ETH and BTC.