While investors are carried away with the bullish market as Bitcoin hits $10,000 for the first time since February, popular cryptocurrency exchange Coinbase has quietly slashed the interest rate it offers on its dollar-pegged stablecoin USDC.
From 1.25% to 0.15% for no good reason
According to a mail sent to selected users, the exchange stated that effective from June 3, 2020, its Annual Percentage Yield (APY) would be cut down from 1.25% to a mere 0.15% APY.
The San Fransico-based exchange did not give any clear explanation as to what led to the interest rate reduction but noted that the move is in line with its “periodic assessment” of the coin’s interest rate.
Although the move would leave a sour taste in investors’ mouths, the exchange tried to appease users by stating that the unexpected change will not affect their previous earnings because its interests are “earned on a daily basis.”
The move has since sparked outrage in most social media platforms, especially on Reddit, with most crypto enthusiasts stating that patronizing the exchange in the first place was a mistake.
Coinbase is becoming a pain to traders
After launching the USDC stablecoin in collaboration with Goldman Sachs-backed Circle in 2018, Coinbase introduced the 1.25% interest rate on USDC in late 2019, with the exchange stating that it was focused on helping users build more ways to grow their wealth.
Users who had one dollar’s worth of USDC automatically started accruing interest on the platform without any fee.
At the time, the exchange stated that it was trying to imitate the initiative adopted by traditional financial institutions, where account holders earn little interest in storing their money.
The development saw many crypto investors who are not too conversant with crypto trading flocked to the exchange.
The enthusiasm for using Coinbase for this purpose may die off, as many users would be forced to look toward the exchange’s competitors who offer better APY rates.
Coinbase does not seem to be in the good books of investors today due to the negative moves surrounding the exchange within the last 12 hours.
The exchange had earlier shutdown as Bitcoin price rally, which prompted users to vent their frustration across several social media platforms. And this is not the first time such is happening. In fact, Coinbase is now known for going AWOL anything the crypto market rallies.
