US customers of the cryptocurrency trading platform Coinbase will now be able to earn interest on USD Coin (USDC) stablecoin deposits. She announced this in the blog.
Profit for hodling, but no insurance
According to Coinbase, the platform’s American hodlers will be able to receive interest on deposits that are listed on the exchange in the USDC stablecoin, pegged to the US dollar. And the platform plans to pay 1.25% per annum on such deposits. In addition, the size of the deposit will not be paid attention to, as there will be no restrictions on the withdrawal of coins. Interest payments will be made every month. In addition, the company has stated that it has no intention of disposing of customers’ cryptoassets.
One would assume that this will please hodlers, who do not need to withdraw their money from the platform, and then place it at interest on bank deposits. But the company said that there is no insurance for deposits in USDC, like ordinary savings accounts. This means that in case of losses on the exchange, the client will not receive from the Federal Deposit Insurance Corporation (FDIC), or the Corporation for the Protection of Investors in Securities. Therefore, the offered interest rate for such risks is small enough to cover possible losses.
Make a decision for you
At the same time, according to NerdWallet, the level of annual percentage return in Coinbase is higher than the average rate in the United States. Favorable interest on dollar deposits is also offered in Russia. Also, it can be assumed how the interest on the coinbase deposit can affect the popularization of digital assets. And it is quite possible that this will have a positive effect, and will be able to motivate users not to withdraw money in fiat, but to keep it in cryptocurrency. In addition, the transfer of money takes four to five days, which makes it inconvenient for clients to switch from trading to savings and vice versa.
But it is not yet known whether Coinbase contributors will like the 1.25% annual rate without deposit insurance and whether they can opt out of Barclays or HSBC offers.