Coinbase announced on Tuesday that retail investors can sign up for a 4% interest on USDC savings, the latest example of a crypto company offering rates that far outstrip the conventional banking industry's "high yield" savings accounts, which currently offer a pittance of around 0.5%.
Customers of Coinbase may now pre-enroll for the service, which includes gaining the USD Coin (USDC) - a blockchain-based version of the dollar that is backed 1-to-1 by a reserve of actual dollars, according to the firm.
Although the product is virtually the same as a standard high-yield online savings account, Coinbase avoids using the word for legal reasons. The Coinbase USDC accounts, in particular, are not backed by the FDIC, a government organization that protects deposits in banks.
Coinbase provides "peace of mind" as a corporate guarantee that USDC deposits are secure, as well as the account offering "greater interest of increased risk." As a result, customers may be certain that their funds will be safe - if they feel Coinbase is stable and well-managed.
Coinbase is vying with BlockFi, Celsius Network, and Eco in delivering the digital version of a high-interest account. These companies have gone into consumer lending, which is one of the trendiest sectors in the crypto business right now.
BlockFi, for example, is presently giving 8.6 percent returns on USDC and other stable coins, such as those produced by Gemini and Paxos.
Meanwhile, NerdWallet has compiled a list of the best eight "high return" savings accounts available through traditional banking.
Citi and Goldman Sachs' Marcus brands are at the top of the list, both paying 0.5%, while startups PurePoint and Varo are at the bottom, paying 0.4% and 0.2%, respectively.
Coinbase's 4% offering will not be accessible in New York or Hawaii for the time being because of regulatory constraints.