From Seattletimes · · 1m
Federal regulators allow crypto interest rewards
Federal bank regulators say crypto companies can keep paying interest-like rewards to customers.
In brief
Federal bank regulators say crypto companies can keep paying interest-like rewards to customers. Federal regulators permit cryptocurrency exchanges to pass interest-like rewards to customers from stablecoin earnings. Originally reported by Seattletimes.
Regulators permit crypto interest rewards
Federal regulators allow cryptocurrency exchanges to pass interest-like rewards to customers from stablecoin earnings.
Stablecoin interest rules
Stablecoin issuers like Circle cannot pay interest to holders but exchanges such as Coinbase and Robinhood can pass along earnings from stablecoins to customers.
Stablecoin earnings
Stablecoins are backed by bank deposits and U.S. Treasuries which earn interest to fund customer rewards.
Yield comparison
Coinbase offers up to 3.5% yields on USDC balances versus 0.38% for traditional savings accounts.
Deposit flight risk
If customers move savings to crypto exchanges they could reduce banks' lending capacity and cause bank failures.
Banking industry concerns
The American Bankers Association says the rule threatens the funds banks use to make loans that drive the U.S. economy.
What it means
Federal regulators permit cryptocurrency exchanges to pass interest-like rewards to customers from stablecoin earnings.
