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NEW YORK – Coinbase (NASDAQ:), a leading cryptocurrency exchange, has increased its USDC interest rate offering from an initial 2% to an impressive 6% APY for balances up to 250 000 $. For amounts exceeding this limit, the annual interest rate is reduced slightly to 5%. This move puts Coinbase at the forefront of competitive interest offerings, especially compared to riskier on-chain alternatives. However, not all users enjoy these high yields, with some reporting APYs as low as 0.58%, according to MV Capital’s interest rate study.
The interest rate hike comes at a tumultuous time for Coinbase, which is facing litigation from the SEC. The commission’s ongoing lawsuit against the exchange raises questions about the legality of its USDC rewards program under federal regulations. This dispute comes amid a notable decline in the supply of USDC, which recently fell below 25 billion for the first time since the start of last year. The drop in supply can be attributed in part to a temporary devaluation of USDC to $0.87 and a continued decline in market share following Circle’s admission of holding reserves in Silicon Valley Bank , now bankrupt.
Coinbase’s decision to raise interest rates is seen as a strategic move to attract and retain customers in an increasingly competitive market. However, it also highlights the dynamic and often unpredictable nature of the cryptocurrency industry, where regulatory pressures and market fluctuations can have a significant impact on business operations and consumer confidence.
InvestingPro Insights
In line with Coinbase’s recent developments, InvestingPro’s data and advice offer illuminating insights. With a market capitalization of $23.7 billion and volatile stock price action, Coinbase has shown strong performance over the past three months and significant price growth over the past six months. The company’s revenue stands at $2627.47M, as of Q3 2023, which is a remarkable figure despite the revenue growth of -47.88% during the same period.
InvestingPro Tips points out that three analysts have revised their earnings upwards for the coming period, which could be a positive sign for potential investors. However, it is important to note that the company was not profitable in the last twelve months and analysts do not expect it to be profitable this year.
For those interested in other insights and advice, InvestingPro offers a wide range of additional tips, including over ten specifically for Coinbase. This Black Friday, InvestingPro subscriptions are available at up to 55% off, providing a great opportunity for investors to access a wealth of valuable financial information.
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