Coinbase, the popular cryptocurrency exchange, has announced an expansion of its USDC rewards program, now offering customers a 4% return on their holdings of the stablecoin. The previous rewards rate stood at 2%, and this increase aims to incentivize more users to utilize Coinbase services for storing their USDC tokens.
The company has made it clear that the reward rates are subject to change and that customers can view the latest applicable rates directly within their Coinbase accounts. This move comes at a time when Coinbase is under scrutiny from the U.S. Securities and Exchange Commission (SEC), which recently filed a lawsuit against the exchange, alleging violations of securities laws.
Among the claims made by the SEC is that Coinbase’s staking service qualifies as an investment contract that the company failed to register. However, Coinbase has clarified that while customers cannot stake USDC, eligible users in certain regions can earn rewards on their USDC holdings.
Coinbase had previously attempted to offer a 4% annual percentage yield (APY) on USDC deposits through its proposed Lend program in 2021. However, the plan was scrapped after the SEC expressed its intention to sue the company over the initiative.
Unlike the proposed Lend program, Coinbase finances the USDC rewards from its own funds, as stated in its FAQs. The company assures users that it does not lend or redeploy the assets without obtaining permission from the users.
With a circulating supply of $28.2 billion, USDC is the second-largest stablecoin pegged to the U.S. dollar, following Tether’s USDT, in terms of market size. Despite facing ongoing scrutiny from the SEC, Coinbase’s decision to improve its USDC rewards program showcases the exchange’s dedication to attracting and retaining customers in the fiercely competitive cryptocurrency industry.