MV Capital CIO and partner Tom Dunleavy have shared a screenshot of an email from Coinbase showing a 6% interest rate only applying to the initial 250,000 USDC. Subsequent holdings will revert to a 5% interest rate.
Some users have noticed discrepancies in the displayed interest rates on their dashboards. While some users observed rates as low as 0.58%, others still maintained an APY of up to 5%. Dunleavy suggested that the difference might be related to the amount held in Coinbase and emphasized the distinction between different staking pools.
Dunleavy commented: As many have mentioned, you can earn much higher returns on the blockchain. It’s all a personal choice if it’s worth the trade-off. Personally, I’m quite satisfied with this rate compared to getting 10-20% LP for a pool with some risks that aren’t present here.
The U.S. Securities and Exchange Commission (SEC) recently filed a lawsuit against Coinbase, alleging various securities violations related to token offerings. Interestingly, while the SEC considers the platform’s staking service an unregistered securities offering, the SEC’s fees do not explicitly address the specific implications of the USDC reward program.
Therefore, Coinbase’s compliance status with regards to federal securities laws regarding the USDC rewards program remains uncertain.
The supply of USDC has rapidly decreased over the past year, dropping below $25 billion, the lowest since 2021. Just in the past month, the USDC supply has decreased by nearly $1 billion, now totaling $24.39 billion as of the latest update.
This trend began earlier in the year when USDC faced challenges due to the U.S. banking crisis. Circle, the issuer, revealed that they held some reserves for USDC at Silicon Valley Bank, which later went bankrupt.
This revelation temporarily caused USDC to drop in value, reaching as low as $0.87 before rebounding. Despite market conditions improving, the USDC market share continues to trend downward.