In a central banking system, as it currently exists across the world, commercial banks are subservient to the nation’s central banks, setting their interest rates according to central banks’ policies. In Europe, the European Central Bank (ECB) has long gone into a negative interest rate zone. This resulted in hundreds of commercial banks charging people for having deposits.
In the United States, although financial affairs have not come to that point, an interest rate of 0.25% is not much to be excited about either. Outside of stock market dividends, the only accessible alternative for most people is to embrace cryptocurrencies. While they may be volatile, the upside of cryptos is that they offer a path to passive income that overshadows traditional savings accounts’ gains. One popular option includes bitcoin interests.
In this Guide:
Earning Potential of BTC
In a traditional savings account, you get with your local bank, the bank would give you a small APY (annual percentage yield) for loaning out your money to third parties.
However, in order to prevent the economy from “overheating” and stimulate economic growth, central banks have been keeping the interest rates as low as possible. After all, because interest rates are low, this encourages borrowing, which then encourages investing.
In the crypto space, the same principle applies, but without any central body setting the policies. Therefore, your cryptocurrency deposits generate a much higher interest rate as they are loaned out to third-party borrowers. In contrast, a traditional savings account can generate between 0.1%–0.6% annual interest yield (APY). This is several orders of magnitude less than cryptocurrency savings accounts that can go up to 10% APY or even higher.
Overall, you can generate income from bitcoin and other cryptos using the following methods:
- Trading – the simplest method consisting of buying the dip. Meaning, you buy bitcoin and then sell it at its higher price level than when you bought it. Such trades can be completed on a micro level — hourly or daily — or on a macro level, years after you have purchased BTC.
- Arbitrage – similar to BTC trading, but between different marketplaces. For example, South Korea is notorious for having a much higher BTC price than the rest of the world. This phenomenon is called the kimchi premium. Accordingly, if one manages to go through the regulatory hurdles and enter the South Korean crypto market, you could buy BTC on the cheap in the Western market and sell it in South Korea for a hefty profit.
- Lending – a much more elegant option for crypto gains. Instead of actively trading, you simply lock in your bitcoin deposits so that others can borrow from this crypto pool. Many crypto exchanges offer this passive income, with APY depending on the time period for locking your funds. For example, KuCoin exchange offers 4.38% APY for lending 1 BTC for 28 days.
- Savings Account – much like traditional savings accounts, it is the passive income method that requires the least engagement. Instead of a bank that yields an interest rate on your deposit, a crypto savings account relies on either a DeFi protocol or a centralized crypto exchange. The only difference between a regular crypto wallet and a crypto savings account is that the latter allows you to accrue interest over time.
This guide will focus on the last two methods to earn interest from cryptocurrencies. However, keep in mind that almost all crypto savings accounts are not FDIC-insured. In the banking system, your cash deposits are automatically ensured by registered banks for up to $250,000.
You have to take responsibility by either properly selecting the right platform or acquiring insurance via Nexus Mutual or a similar smart contract-based service in the crypto space. In order for your funds to be accessible to others, which gives you your interest rate, the platform holds your savings account’s private keys. Therefore, it is paramount that they offer some kind of security for your funds. After all, if they go under — either from cyber-theft or bankruptcy — your funds will follow suit.
For this reason, make sure the platform you are entrusting your crypto assets with has a good reputation.
More importantly, if they had previously been hacked, that they gave out proper compensation. Under these criteria, here are the top services that provide crypto savings accounts with bitcoin interest or high yields.
Top 12 Platforms for Crypto Savings Accounts
Description: BlockFi is a hybrid crypto-banking platform, combining the best of Decentralized Finance (DeFi) and Centralized Finance (CeFi). As such, it allows you to leverage your crypto assets with greater security instead of just leaving them in your offline wallet.
You can use BlockFi as a savings interest account, for trading cryptocurrencies, and for crypto-backed loans. Moreover, BlockFi’s equity funds are organized in such a way that any losses suffered first go to the company, thus prioritizing its customers.
Interest rate: Up to 7.5% APY, making it an excellent platform for consistent yields.
Key features: Monthly payouts. No minimum balance. No hidden fees. Alongside bitcoin (BTC) and ethereum (ETH), BlockFi offers 11 other cryptocurrencies. Your crypto funds are secured in cold storage by Morgan Creek Capital Management, Gemini, and Valar Ventures.
Description: One of the most regulated and widely available platforms (over 200 jurisdictions), Nexo, is not only great for earning bitcoin interest, but for fiat loaning/borrowing as well. It even has its own Nexo debit card, so you can pay with cryptos without first having to convert them into fiat.
Nexo is partnered with the biggest players in the crypto space you’ve heard of: Paxos, Brave, BitGo, Ledger, Securitize, Blockchain.com, Circle, and many others.
Interest rate: Up to 12% APY with daily payouts.
Key features: 20 cryptocurrencies on offer as collateral for loans, with over 40 fiat currencies. Insurance worth $375 million on all crypto assets.
Description: Binance is the world’s largest crypto exchange, with a trading volume of over $13 billion per day. Since its launch in July 2017, not only did it develop its own smart contract blockchain — Binance Smart Chain — but it extended its services to crypto loans, tokenized stocks, savings, and locked staking.
Interest rate: up to 30% APY, depending on the coin locked in, and on either fixed or flexible deposits.
Key features: Binance Savings account generates consistent yields across all the major cryptocurrencies, including stablecoins.
Description: Second in size to Binance, Coinbase, is the first crypto exchange to be listed on NASDAQ under COIN, tying its stock price to bitcoin’s price moves. Given the fact that Jeremy Allaire founded Coinbase alongside his Circle payment platform, it leverages Circle’s core product — USD Coin (USDC) stablecoin.
Coinbase doesn’t loan out your USDC deposits so that you can withdraw them more frequently.
Interest rate: Up to 4% APY for USDC-only deposits. While relatively low, it is still over 50X the traditional savings account average.
Key features: Coinbase allows you to earn monetary rewards by finishing crypto courses and solving quizzes. For every $100 worth of deposit, you earn another $5 as a bonus.
Description: Based in New York, Gemini, is one of the most secure crypto exchanges, enjoying FDIC coverage. It was founded in 2014 by the Winklevoss twins — Cameron and Tyler Winklevoss. They had previously developed ConnectU, Facebook’s predecessor, which brought a federal lawsuit alleging that Facebook ripped off ConnectU.
The lawsuit had been settled at $65 million in 2009, providing the Winklevoss twins plenty of resources to embark on other projects. Unfortunately, Gemini’s savings account is only available in Singapore and the United States.
Interest rate: up to 7.4% APY on cryptocurrencies and stablecoins. Bitcoin interest at around 2.5%.
Key features: Gemini Earn account with no hidden fees. Invested crypto assets (over 25) are redeemable at any time so that you can transfer them to your trading account.
6. Celsius Network
Description: Founded in 2017, the Celsius Network platform, launched with a mission to offer financial services of loaning and borrowing to the millions who are unbanked across the world. Accordingly, it is available in over 100 nations, accruing over $15.6 billion in assets under management.
Their motto is to “unbank yourself” by using Celsius’ all-platform app, providing high interest and low borrowing cost. Celsius has paid out over $369 million in interest yields across 837k users in the last year.
Interest rate: up to 17% APY with weekly payouts.
Key features: No minimum deposits, fees, or withdrawal penalties and restrictions. First transfer worth $400 in crypto grants a $50 bonus in BTC, but only if you HODL it for 30 days.
Description: Singapore-based company founded in 2019 by Juntao and Simon, Hodlnaut, has grown to over $250 million assets under management with a team of only 20 people. As of May, Hodlnaut serves 5,000 users for borrowing and lending services, automated swaps, and portfolio management.
Interest rate: up to 10.5% APY with weekly payments. Bitcoin interest currently yields 6.2% APY.
Key features: No fees or minimums for deposits. A small fee for withdrawals without limits and no lockups. Hodlnaut offers two cryptocurrencies and three stablecoins to earn interest on: BTC, ETH, USDC, USDT, and DAI. Additionally, you can also trade in synthetic bitcoin, WBTC. Hodlnaut covers users’ risk by offering Nexus Mutual insurance.
Description: Founded and based in New York in 2017, Voyager, is an app-based cryptocurrency broker platform, akin to Robinhood but for over 60 cryptocurrencies. It is only available in the United States, with the exception of New York state. It is a publicly-traded company listed in Canada under VYGVF.
Although available for retail investors, Voyager’s primary focus is institutional traders with its OTC desks.
Interest rate: up to 10% APY.
Key features: No commission fees. Very user-friendly interface. However, because it connects to web-based content, sometimes it has issues loading pages. Can route trades to multiple exchanges.
Description: Crypto.com was founded in 2016 by Bobby Bao, Gary Or, and Kris Marszalek. Befitting the highly-sought domain name, its goal is to spread cryptocurrency adoption regardless of national borders. With over 10 million users, Crypto.com has matured to not only provide trades for over 100 cryptocurrency exchanges but loaning and paying for bills with crypto debit cards.
Interest rate: up to 8.5% APY on cryptocurrencies, and up to 14% APY on stablecoins. Weekly payouts.
Key features: Crypto.com has its own MCO token, which can also be staked to earn interest yield. However, the rates change on a weekly basis. Recently, the platform added its own NFT marketplace. With wide coverage, a proven track record, high-interest yields, and sleek app, it is easy to recommend crypto.com.
Description: Cyprus-based crypto exchange, YouHodler, is a recent player in the blockchain space, led by Ilya Volkov. Although the company holds full membership of the Blockchain Association’s Financial Commission, its services are not available in the United States. However, it is available in most of Europe and Asia.
Interest rate: up to 12.7% APY.
Key features: Minimum deposit at $100. Assets can be withdrawn at any time. You can earn YouHodler’s APY on 20 cryptocurrencies and stablecoins. The crypto savings and exchange platform also offer the highest loan to value ratio at 90%.
Description: Founded in 2018, this Toronto-based cryptocurrency management platform offers high-interest savings accounts for only two coins — BTC and USDC stablecoin. Alongside this option, you can take advantage of its bitcoin-backed loans secured by BitGo custodian. The maximum loan period is 12 months, with a loan-to-value (LTV) ratio of 50%.
Ledn’s B2X service can further leverage your loans for the same period. However, if the BTC price goes down in the meantime, you risk getting margin-called in order to maintain LTV.
Interest rate: up to 9.5% APY on bitcoin and USDC savings accounts.
Key features: Holds Proof-of-Reserves attestation conducted by 25 reputable accounting firms. The savings account interest rate is sent to the Genesis account for payout. Each USDC-based withdrawal costs $10, but the funds are not locked in.
12. Outlet Finance
Description: Founded in 2019 by Patrick Manfra, Outlet Finance, is a fintech company backed by Consensys, which supports it with its blockchain-oriented solutions. Moreover, it is a part of the previously mentioned Celsius Network.
Unlike all other platforms on this list, you can’t trade or stake BTC or other cryptocurrencies on Outlet Finance. However, you can generate one of the highest USD yields. For those who are too skittish to get involved in cryptos, no commercial bank offers such yields.
Interest rate: up to 9% APR (unlike APY, annual percentage rate doesn’t count in compound interest).
Key features: Minimum deposit at $1. No maintenance or withdrawal fees of any kind. Offers smart-contract-based Nexus Mutual insurance. Supports ACH bank transfers directly to your account.
Debanking Has Never Been More Enticing
If you have any amount of crypto assets, you don’t have to resort to begging Elon Musk on social media in the hopes of your assets gaining value. Instead, approach your investment’s long-term, just like your parents and grandparents.
It is clear that banking saving accounts have become not only useless but may even drain your funds. Deflationary cryptocurrencies like bitcoin provide a perfect remedy for such central bank experiments. Fortunately, there are not that many platforms to choose from for high-yield interest rates. The longer the platform has been publicly exposed, and the higher user count it has, the likelier it is that your funds will be safe, even if not FDIC-insured.
Crypto.com, Binance, and BlockFi provide the widest regional coverage, consistently high APYs, and negligible transfer fees. Others have their own strengths, with Gemini being the only one with FDIC coverage. Whichever platform you end up choosing, this passive income method represents the safest method to earn crypto gains.