Coinbase Users Will Start Earning Interest on USDC Holdings

San Francisco-based cryptocurrency exchange Coinbase has announced that from now clients will be able to earn interest for holding the stablecoin USD Coin (USDC) in its crypto wallet. Coinbase users will receive a 1.25% on their USDC holdings per year.

The news had been shared through a blog post on the exchange’s website, stating that Coinbase will pay rewards on literally any amount of USDC held, which will be distributed each month automatically.

Users with at least one dollar’s worth of USDC in their accounts will automatically begin to accumulate rewards on their holdings, with no additional cost or fees. USDC is a stablecoin, whose value is pegged to the U.S. dollar at a 1:1 ratio. It was launched last year by CENTRE, a consortium co-founded by Coinbase and Circle.

Currently, the Coinbase Rewards is only available to eligible U.S. customers, however New York State based users will not have access to this reward system. Furthermore, it will only be available on Coinbase and not Coinbase Pro – Coinbase’s sister exchange for professional traders.

Coinbase product manager Paul Katsen has explained that the exchange is trying to build more ways for customers to grow their wealth on Coinbase.

He further added:

“One of the things we know is a bad customer experience is having to move your money back and forth from Coinbase to a bank account [to] earn a little bit of interest in the bank account. We’re trying to bring some of these experiences together but make them crypto-first and on Coinbase.”

According to Max Branzburg – director of product at Coinbase – the user experience is very simple and smooth. He explained that as soon as a client has USDC in their wallets, they can start earning rewards. All rewards earned on the exchange can be tracked in real-time and used immediately to buy other cryptocurrencies listed on the exchange.

He further stated that the reward system will be financed by the exchange itself, by using pre-existing revenue streams.

“We can pull from the profits we generate as a business to reward our customers for storing their assets on the platform,” Branzburg said, adding:

“We’re fortunate to be able to do that as a profitable business.”

This is an attractive proposal for anyone that trades on Coinbase, as it is more advantageous than moving fiat from a bank to Coinbase and vice versa. Indeed, at 1.25 percent, the interest rate offered by many federally-insured bank accounts trump that of Coinbase. Although it is still higher than the apparent U.S. national average of 0.9 percent, NerdWallet lists a total of 14 savings accounts that offer more than two percent APY.

Meanwhile, Coinbase’s news follows competitor Binance’s launch of a staking platform yesterday, which rewards users keeping coins, including Algorand’s Algo and Stellar’s XLM, on the exchange. Whilst this makes it much easier for users to grow their supply of stake-able coins, it does mean that the exchanges will have sizeable influence over such proof-of-stake blockchains, which is a worrying sign.

Morningstar to Build Evaluation System Underpinned by Blockchain Technology

Financial services Morningstar Credit Ratings has announced plans to implement an evaluation system for debt securities issued as tokens on a blockchain, aiming to make the emerging asset class more credible for investors.

According to the report, the new rating system for rating bonds will be implemented directly on the Ethereum blockchain and eventually on other blockchains as well by using a technology called an oracle. Oracles move trusted data, like a Morningstar rating for instance, onto a blockchain in a secure way that ensures the rating isn’t doctored, allowing it to be used as a term in a smart contract.

The oracle relies on third-party providers to convert business debt into tokens similar to Bitcoin. The securitized tokens are then dispersed to investors via a smart contract, with the terms of the investment, the public addresses of the investors and the Morningstar rating all operating on the blockchain.

The new evaluation system is set to give publicly available ratings of one to five stars to crypto assets, whilst the company’s premium custom service will utilize its internal modeling to help clients evaluate and assess given investments. The company further added that the public ratings could be launched later this year. Their premium service, on the other hand, will be made available by the end of 2020.

Chief Operating Officer at Morningstar Credit Ratings, Michael Brawer, has stated in an interview that this evaluation system could allow and facilitate the shift of the $117 trillion debt securities industry to a decentralized financial network.

Seeing as the industry is overseen and governed by custodians and trustees, the availability of an evaluation system that allows customers to assess investments and make decisions based on that, could enable billions of dollars investment to enter the crypto space as the new rating services can make the new asset class more credible.

Brawer further stated:

“We’re looking to see how we can also provide credit opinions, whether it’s a credit rating or different types of credit data and credit analytics that accompany those debt instruments, and we’re also looking to provide our services on a blockchain.”

Brawer explained that the company had seen the demand for rating services within the crypto space when it was approached by a range of investors who issue and securitize debt securities, including small business loans and home equities on blockchain.

“The objective would ultimately be to allow investors in a digital debt security to be able to run an independent, third-party model and see the results of that model on the blockchain,” says Brawer.

According to the report, Morningstar’s rating services covers both government and corporate bonds,whilst its blockchain products are still limited to structured debt instruments.

The company offers both security and convenience through their services, and investors can directly connect lenders and borrowers, as well as eliminate custodians and trustees in a transaction and saving as much as 500 basis points in fees.

At the moment, due to the stringent regulatory framework imposed by the US Securities and Exchange Commission (SEC), the company could end up having to change their blockchain methodology.

Meanwhile, there are a few potential candidates who would partner with Morningstar to launch the product, which includes fintech startup Figure, alternative investment company Cadence and DeFi platform Polymath.

Kik to Shut Down App and Focus on Its KIN Cryptocurrency

Kik Interactive, the Ontario-based startup behind the popular mobile messaging app Kik, is considering shutting down the messaging app, according to local reports.

Following reports that the company’s crypto-focused subsidiary Kin had laid off 70 employees, CEO Ted Livingston announced Monday that Kik will also be shutting down its core messaging service. The company’s CEO stated that the company had made a deliberate decision in order to focus on fighting a recent U.S. Securities and Exchange Commission (SEC) ruling.

“Instead of selling some of our Kin into the limited liquidity that exists today, we made the decision to focus our current resources on the few things that matter most,” he wrote in a blog post, further adding that this meant shutting down the Kik app.

He further added that the company would reduce its crypto operations to just 19 core developers in an effort to ensure that KIN can scale to become the true currency of the internet going forward.

The company first launched Kin in 2017, raising $100 million through an initial coin offering (ICO). The coin had become one of the most used cryptocurrencies in the world, with 600,000 monthly active spenders.

Meanwhile, Kik has been wrapped in a legal battle with the SEC over the issuance of its KIN tokens. From May to September 2017, Kik offered and sold 1 trillion digital tokens called “Kin.” More than 10,000 investors worldwide purchased Kin for approximately $100 million in US dollars and digital assets — over half of this sum coming from investors located in the United States.

However, Kik’s offer and sale of Kin was not registered with the SEC, and investors did not receive the disclosures required by the federal securities laws.  In response to that, CEO Livingston had decided to fight the ruling and therefore shutting down its messaging app in order to fully concentrate on the legal battle.

Despite the messaging app shutting down, Livingston pointed out that the core developer team is pivoting towards further developing the KIN token.

He explained:

“Kin is a currency used by millions of people in dozens of independent apps. So, while the SEC might be able to push us around, taking on the broader Kin Ecosystem will be a much bigger fight. And the Ecosystem is close to adding a lot more firepower.”

Ever since the legal disputes in June, Kin’s token has dropped from $0.000036 to $0.0000105 as of today, according to data provider Messari.

Binance and Paxos Launch NYDFS-Approved Stablecoin

Leading crypto exchange Binance has announced its partnership with digital asset trust company Paxos to launch a USD-pegged stablecoin.

According to the announcement made on Thursday, the two companies will launch a USD-pegged stablecoin called Binance USD (BUSD). The stablecoin has already received the approval of the New York State Department of Financial Services (NYDFS) and will be available for trading later this month.

Paxos co-founder and CEO Asia Rich Teo has stated that the NYDFS’s approval of the stablecoin is a vital step towards long term stability in global crypto markets. He further added:

“We are proud that our stablecoin as a service offering enables trusted companies like Binance to introduce products customized for their users. The Paxos brand symbolizes regulatory integrity, consumer protection and transparency for all of our partners.”

The upcoming stablecoin will be backed by U.S. dollar on a 1:1 ratio. In addition to that, a Binance spokesperson stated that the BUSD will be built on the Ethereum blockchain, however it may move to Binance Chain in the future.

The coin will start trading on Paxos’ and Binance’s exchange platforms later this month. Paxos will issue the coin and look after the reserves of dollars–and Paxos customers will be able to directly purchase BUSD tokens through the company’s wallet using either U.S. dollars or PAX, its own stablecoin.  Binance users will likewise be able to trade BUSD on the platform.

BUSD will trade against three cryptocurrencies – Bitcoin (BTC), Binance coin (BNB) and XRP – on the platform. According to the announcement, Paxos will act as both the custodian and the issuer for the stablecoin, and will regularly audit the dollar holdings.

Binance CEO Changpeng Zhao, commonly known as “CZ”, stated that Paxos is leading the digital trusts space and further added that Binance is excited to work with them in developing their native stablecoin.

“We hope to unlock more financial services for the greater blockchain ecosystem through the issuance of BUSD, including more use cases and utility through the power of stable digital assets.”

Following this news, BUSD joins the Paxos Standard and the Gemini Dollar as an NYDFS-approved stablecoins.

Meanwhile, Binance has been steadily showing interest in stablecoins. The exchange previously announced its intention to issue stablecoins worldwide as part of its Venus project. Back in July, it listed BGBP stablecoin, which is pegged 1:1 to the British pound, however is built on the Binance Chain blockchain network. At the time, the company said it would launch a collection of stablecoins pegged to different fiat currencies.

K-Pop Giant SM Entertainment Plans to Launch Blockchain Platform

Amidst a shareholder battle and a falling stock price, SM Entertainment – one of Korea’s top-three talent agencies – has announced plans for building its own blockchain platform with a native cryptocurrency with goal to power business growth.

According to a report from local media outlet Chosun Ilbo, Joo Sang-sik, director of the company’s technology arm – CT-AI Labs, made the announcement at the Upbit Developer Conference in Incheon on September 4th.

Founded in 1995 by Lee Soo-man, the company is home to some of the biggest names in K-pop – including groups EXO, NCT, Super Junior, Red Velvet and Girls Generation. Last year, SM raked in $518 million in revenues.

SM Entertainment is currently listed on the Korean stock exchange and has a market capitalization of roughly $600 million. The firm has recently gone through a management reshuffle, as shareholders raised concerns about its finances and some of its business decisions. Its stock price has dropped 43% since last November.

According to Joo, the entertainment business currently uses an inefficient payment and settlement systems, therefore he believes blockchain to be the solution that could help address those issues.

Joo stated that the company is aiming to “launch its own blockchain-powered mainnet” and has no plans to use an existing platform. He further explained that the blockchain network would allow fans to be more engaged with the entertainment ecosystem by investing in artists’ work through digital currencies.

SM said it intended to pursue private and public blockchain initiatives and said that it is also currently talking to a number of potential partners regarding the construction of its forthcoming blockchain business.

The report further noted that Joo responded positively to questions about the possibility of launching an SM token, however declined to give a definite answer on the matter. The company strongly believes that a token economy built using cryptocurrency would allow artists to create higher-quality content, powered by fan contributions.

According to the report, the entertainment company sees blockchain as a long-term plan, and that fans could expect to see it develop in stages, according to priority.

As previously reported, several smaller South Korean companies have attempted to link the increasingly lucrative world of K-pop to cryptocurrencies with decidedly mixed results. Last year, a platform called Ko-fun was launched with the objective to allow K-pop-related crypto transactions on a blockchain network. For reference, the platform planned to create coins for individual acts such as a BTS Coin.

However, SM would become the first major South Korean entertainment company to try and move into the cryptoverse in earnest. Prior to this, the company had showed interest in pursuing blockhain, and earlier this year joined Sony and several South Korean entertainment providers on an initiative named snowM.

The joint partnership aims to build and develop a blockchain-powered fan community, and will make use of Dunamu’s Lambda256 blockchain platform.