Coinbase users now gain access to high-yield opportunities on USDC within the decentralized finance (DeFi) realm, potentially earning up to 10.8% returns.
In a significant move, Coinbase, a leading cryptocurrency exchange, has integrated Morpho DeFi, a major player in the decentralized lending protocol, into its platform. This convergence of centralized and decentralized finance (DeFi) represents a new era for cryptocurrency users, providing easier access to DeFi yields without the need for technical knowledge of external protocols or self-custody wallets.
The total circulating supply of stablecoins, digital assets pegged to the value of traditional currencies like the US dollar, recently surpassed $300 billion, according to CoinMarketCap. With the integration, Coinbase users can now lend their USDC holdings directly from their accounts, potentially doubling their yield compared to the platform's standard rewards program. Coinbase offers yields up to 10.8% for USDC holders through the Morpho DeFi integration.
The Bank Policy Institute (BPI), a financial industry trade association, has raised concerns about potential loopholes in regulations regarding stablecoin yield arrangements. The BPI urges regulators to address arrangements that might allow exchanges or their affiliates to provide yield through third-party partners. The BPI states that stablecoins neither fund loans nor are regulated as securities.
Despite these concerns, the integration comes at a time when stablecoin usage is growing rapidly. The integration of Morpho DeFi on Coinbase is a response to this growth, as well as the increasing interest in DeFi lending among institutional investors. DeFi lending has seen dramatic growth this year, jumping 72% year-to-date.
A recent survey found that 40% of US adults would be open to using DeFi platforms if pending crypto legislation were enacted into law. The integration of Morpho DeFi into the Coinbase app is a step towards making DeFi more accessible to the general public.
World Liberty Financial, a DeFi consulting firm, was involved in the integration of Morpho into the Coinbase app. The dollar-denominated TVL (Total Value Locked) of Morpho DeFi has seen a steep increase this year, reflecting the growing popularity of the platform.
Coinbase has pushed back against claims that dollar-pegged stablecoins undermine traditional banking. The company emphasises the benefits of stablecoins, such as increased financial access, faster transactions, and lower costs, for both individuals and businesses.
As with all DeFi protocols, higher returns from the new offering come with additional risks that users should understand before participation. The BPI has questioned yield-bearing stablecoins under the GENIUS Act, a proposed bill that aims to regulate the crypto industry. It is essential for users to stay informed and make informed decisions when participating in DeFi lending.
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