Coinbase Shifts USDC Rewards to Subscription-Based Model

Coinbase will soon limit its USDC rewards to paying members, marking a notable shift in how the exchange structures incentives for retail customers. The change takes effect on December 15. 

Hence, many free-tier users will now hold USDC without earning the yield they previously enjoyed. The move signals a broader attempt by the exchange to strengthen subscription revenue as stablecoin-related returns adjust to lower interest rates across major markets.

Subscription Model Becomes Central to Rewards

The exchange plans to keep the 3.5% annual return available only for Coinbase One subscribers. Non-paying users will no longer receive returns from the program, which historically offered between 2% and 3.5% to eligible customers. 

Moreover, Coinbase runs the reward system from its own resources. It does not rely directly on interest from customer deposits, although broader rate conditions still influence internal adjustments.

USDC holdings remain backed by short-term government securities under Circle’s reserve structure. However, Coinbase says it avoids using customer balances for lending activities. The exchange instead evaluates its reward structure frequently and adjusts based on market conditions and internal strategy.

Global Rules and Lower Rates Shape the Decision

Regulatory demands played a role earlier this year. Coinbase halted rewards in Europe after new MiCA rules introduced stricter requirements. Consequently, the company focused on regions with more flexible frameworks. Besides, rewards returned to several markets in September, and the firm promoted higher rates in Canada to support new user growth.

However, the macro environment changed again. The Federal Reserve cut interest rates for the third time this year. The benchmark range now stands at 3.50% to 3.75%. 

Lower yields reduced the spreads that helped support reward programs across financial platforms. Hence, Coinbase trimmed reward rates in multiple regions throughout the year. UK users faced two reductions, while US users saw a decline to 4% before the latest shift to 3.5%.