Cryptocurrency exchange Coinbase (Nasdaq: COIN) announced on September 18, 2025 that customers can now lend USD Coin (USDC) directly through its platform and earn yields as high as 10.8%. The initiative is supported by decentralized finance protocol Morpho and vault curator Steakhouse Financial, and is being gradually introduced across the United States (excluding New York), along with Bermuda and additional countries.
Simplifying DeFi Access
CEO Brian Armstrong highlighted on social media platform X: "Now you can lend your USDC and earn more (up to 10.8% currently). It’s simple to use, and gives users the benefits of DeFi without the complexity. Rolling out now in multiple countries, including the US (ex. NY)." The program uses Coinbase’s layer-2 network Base to link lenders and borrowers via smart contract wallets. When users deposit USDC, a contract wallet is automatically created to route funds into Morpho’s protocol. Steakhouse Financial manages allocations across various markets to maximize returns.
Higher Yield but No Deposit Insurance
Coinbase previously offered yields of 4.1% APY on USDC holdings, with Coinbase One subscribers eligible for up to 4.5%. The onchain lending significantly expands opportunities for higher returns. However, Coinbase clarified that USDC rewards are not savings accounts and do not carry protections from the Federal Deposit Insurance Corporation (FDIC) or the Securities Investor Protection Corporation (SIPC). USDC, with a circulating supply above $73.6 billion, maintains a 1:1 peg to the U.S. dollar and is valued for its stability and liquidity.
Market Implications
This move marks a major step in bridging centralized exchange convenience with DeFi yield potential. By leveraging the low-cost and high-speed Base network, users can participate in lending markets almost instantly while retaining control of their funds. Analysts suggest this could attract a wave of passive income seekers into DeFi, though caution about smart contract risks and market volatility remains. Coinbase noted the feature is rolling out gradually and plans to expand to more jurisdictions in the future.