Top-tier crypto exchange Coinbase reportedly disclosed details of an update, enabling a maximum 4% interest earning on USD Coin, via a new offering, deemed by the firm that can replace fiat savings accounts.

Specifically, Coinbase reportedly shared that it is now available for its clients to achieve 4% annual percentage yield (APY), via the lending of their assets, for the U.S. dollar-pegged stablecoin USD Coin (USDC).

Coinbase is reportedly directing the focus primarily on banks with its new offering, noting it provides a better return compared to a standard US-based savings account . 

However, Coinbase further revealed that the Federal Deposit Insurance Corporation or the Securities Investor Protection Corporation offer no protection to the loaned USDC – which is a different feature from standard savings accounts in America. 

The exchange is not also rolling out a crypto interest account that comes with “attractive rates on customers’ assets”. 

While the return rates of the majority of US-based saving accounts is normally under 1% on the dollar, numerous crypto exchange entities offer an interest rate of approximately 8% for lending U.S. dollar-pegged stablecoins.

“While the high interest rates are appealing, they can present varying levels of risk. You may find that your assets are loaned to unidentified third parties and subject to their credit risk, which could result in a total loss of your crypto holdings.” Coinbase further explained. 

Previously, the crypto platform worked with a 1.25% yields on USDC offered to clients from October 2 years ago to June 2020, which was then followed by a surprise disclosure of rewards for users holding the stablecoin would fall down to 0.15%.