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CRO falls 12% after Crypto.com cuts rewards for Visa cards

 


Cronos (CRO) has emerged as one of the worst-performing cryptos, trading at $0.310417, down 12.86% over the past 24 hours.


One of the main reasons for CRO's price drop is a blog post Crypto.com published on Sunday, May 1st noting that they have reduced the rewards they are offering on their lower-end Visa cards. Crypto.com also said it reduced CRO staking rewards by more than half.


The exchange also added that its Midnight Blue card tier will no longer offer rewards to its customers starting June 1, but other tiers like Icy White, Obsidian, and Ruby Steel will offer reduced rewards. In addition, there will be a spend cap on rewards that will cap the reward at $50 per month.


However, Crypto.com called it a "tough decision" and said it had to be done because of the need for sustainability.


The cut in rewards brought the exchange a lot of criticism on social media, where users said they were getting fewer CRO staking options and less use of Visa cards. Some also threatened to opt for other crypto card operators like Coinbase and Binance.


However, this isn't the first stimulus cut the exchange has made this year. In March, it twice lowered the interest rate on token deposits to give its users advance notice.


Despite the challenges, the Crypto.com exchange with over 10 million users seems to be growing by the day, apart from being the official sponsor of the 2022 FIFA World Cup.


Reduced crypto lending activity

Crypto.com's recent move highlights a broad problem in crypto lending due to the rising US interest rate, high inflation, high yields and poor market performance that are no longer sustainable. An increase in crypto adoption leads to more account holders, making large withdrawals unattainable.


However, this problem has been most notable for most DeFi lending platforms, where they are being forced to lower interest rates as the number of users and deposits continue to grow. Crypto lending platforms could also follow suit as the adoption rate increases.

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