Blockchain protocols do not default pay interest to people who hold their currencies in their native currency – unlike the interest paid out in a traditional savings account or dividend distributed to shareholders. Many businesses pay interest on the cryptocurrency you own if you deposit your funds in these protocols.
Certain companies in this class invest your crypto in improving the security of blockchains, and others help to add liquidity to the vast pool of crypto, which is the basis of the decentralized financing (Defi) protocols. Some may also loan your cryptocurrency to other companies, and businesses may use your crypto to invest. They all share one feature in common: they use the profits they make from these transactions to pay you a regular interest on your investments.
How do crypto savings accounts function?
These accounts were developed because dealing with protocols that are not familiar on your own can be confusing and complex. A crypto savings account is an ideal option if you’re looking to earn some interest from your crypto and not allow it to remain in the dark. Similar to an account for savings with a traditional bank, the firm behind the account will provide loans, invest in or invest your cryptocurrency on your behalf, and then make a portion of the earnings in regular interest payments.
Several crypto exchanges (like KuCoin, Coinbase, or Binance) provide savings accounts for cryptos like crypto firms such as BlockFi, Celsius, and Nexo. The two companies are vastly different in the rates of interest they offer to their customers and the terms that interest is paid out, like the annual return, lock-up period, and the frequency that interest is paid.
Savings accounts for crypto may give higher rates when you’re willing to secure your crypto for a time or own the platform’s token. Nexo, for instance, raises interest rates by 4 to 5 percent for owners of its governance token NEXO. It is also worth noting that Binance and Crypto.com are among firms that provide higher interest rates for holders who store their tokens for some time. Be aware that this type of deposit implies you aren’t able to sell your crypto in the event of an abrupt economic downturn.
Top Crypto Savings Accounts
Below, you’ll find the best crypto-based savings account and their highest advertised yields on different cryptocurrencies. Take a look for more details about the specific company (along with some limitations).
Hodlnaut
Hodlnaut is among the highest returns you can earn on your cryptocurrency. They allow only weekly withdrawals from your wallet; however, they do not have time limits as well as minimum withdrawals. As of now, you can earn as much as 13.86 percent from your cryptocurrency.
KuCoin
KuCoin is among the more renowned cryptocurrency exchanges. They offer a fantastic savings product known as KuCoin earn. Earn crypto with a high APY through investing, saving, or making use of promotions.
KuCoin Earn also has more resources available to be earned than many other businesses on this list. As of right now, you could earn 6.1 percent APR on BTC USDT. Additionally, they have other investments that offer better rates of return.
Nexo
Nexo has minimal lock-up time (less than 24 hours) and third-party assurances of its cryptocurrency assets. It’s a great alternative with incredible returns on US dollars and the most competitive rates on cryptocurrency currencies. Today you can enjoy as high as 7% for stablecoins and up to 8 percent on Bitcoin.
It doesn’t specify how much to put in to earn the highest rate of return.
Additionally, at present, you can get a bonus of $25 BTC Bonus when you sign up for new accounts, go through advanced verification and then deposit at least $100 worth of supported assets to Nexo’s platform. The balance must be maintained at Nexo for a minimum of 30 days.
Gemini
Gemini was recognized as a good option for trading and investing in crypto over the last couple of years. Their platform serves as the basis for many other platforms.
But, Gemini is late in the game of saving cryptocurrency. They have just launched Gemini Earn, a place where you can earn the interest you earned on your crypto investments. You can earn up to 5.31 percent interest, which includes 1.01 percent on BTC, by transferring your crypto into Gemini Earn.
Coinbase
Coinbase is most commonly known as an online wallet. It also serves as crypto savings account for a few customers. The eligible US customers with a US address can earn as much as 1.00 percent APY with US dollars.
In contrast to other companies listed on this listing, Coinbase isn’t a lender of its USDC. Instead, it’s an opportunity to earn a little interest while waiting to trade in cryptocurrency. Additionally, if you create an account with an incoming customer, you’ll earn $5 in bonus cash for the first transaction!
Conclusion
Each account that is a “savings” account has one feature in common — they’re investments. While it’s fun to imagine gains between 4 and 10%, the returns aren’t 100% guaranteed. Each savings account based on crypto exposes the volatile cryptocurrency investments market. Opening up a cryptocurrency savings account can be an excellent option to diversify your investment portfolio if you’re an advocate for blockchain technology. However, if you’re seeking an FDIC-insured, FDIC-certified savings account to help you build the emergency funds, here are our top high-yielding choices.
