Coinbase cryptocurrency exchange has announced plans to delve deeper into traditional financial services so that users can deposit paychecks directly into their online accounts.
On Monday, September 27th, Coinbase announced that the crypto firm will be rolling out a feature that will allow customers to deposit any portion of their paychecks directly into Coinbase accounts within the next few weeks.
The company’s move comes after customers complained that frequent transfers from their bank accounts to Coinbase are inconvenient and time consuming.
Coinbase Senior Director of Product Prakash Hariramani spoke about the development, explaining that the feature aims to reduce the need for customers to constantly transfer money from their bank accounts to Coinbase – to provide “instant access to the crypto economy”.
Coinbase customers can choose which crypto assets their paychecks should be converted into or the sum in US dollars dominates. Cryptocurrency options include bitcoin, ether, the USD coin pegged to the US dollar and one of more than 100 coins in the app.
With the new feature, users can now make direct deposits by searching for their employer or payroll company through the platform. On its blog, Coinbase said there will be no transaction fees for direct deposit funds.
Consumers can use the money for regular cryptocurrency investments, earn cryptocurrency rewards or spend on the Coinbase card. This Visa debit card enables consumers to purchase everyday items using crypto tokens.
Coinbase announced that it will use an FDIC insured banking partner for direct deposit. The company is partnering with MetaBank for its Coinbase Reward Card.
Other popular online finance apps already allow direct deposit. Online banking firms such as SoFi and Chime offer the service as part of a broad product portfolio, while the stock trading app Robinhood and PayPal also allow paychecks to be deposited.
Coinbase is discontinuing its interest-bearing product
Coinbase’s move to launch the new direct deposit offering comes at a time when the company is trying to navigate a complex regulatory environment.
Last week, Coinbase canceled plans to launch Lend, a product designed to generate high-yielding returns on USDC stablecoin holdings.
Coinbase announced in an update on its blog that it will not launch Coinbase Lend, which would allow users to earn a 4% annual percentage return on the stablecoin USDC by lending these funds to verified borrowers.
Earlier this month, Coinbase announced that the Securities and Exchange Commission (SEC) had threatened to sue the crypto company if it went ahead and launched the product.
On September 7th, Brian Armstrong, CEO of Coinbase, announced that the SEC was vague and apparently unwilling to offer guidance and clarity to Coinbase, which had planned to launch the interest-bearing product this month and then postpone it until October, while she sought to continue holding discussions with regulators. Armstrong also announced that Coinbase had been notified of the interested product by the SEC and threatened to sue Coinbase if it decided to bring the product to market.
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