Picture this: You’re used to the classic savings account at your local bank, where your money quietly earns interest over time. Now, imagine that concept leaps into the digital age of cryptocurrency. As more and more investors get swept up in the whirlwind of crypto’s dynamic volatility and burgeoning global acceptance, the appetite for a crypto version of the savings account is booming.
This is where the idea of a crypto savings account steps in, offering investors a chance to accrue interest on their digital currency holdings. In the native habitat of blockchain technology, just holding onto the built-in currencies won’t yield any interest – a stark contrast to the traditional bank savings accounts or dividends received by stockholders. However, many enterprising companies are ready to flip the script. They’re willing to reward you with interest for letting your cryptocurrency stash rest in their care.
These companies employ various strategies with your digital assets. Some put your crypto to work underpinning the security framework of blockchain networks, while others inject it into the sprawling pools that fuel decentralized finance (DeFi) platforms. Some lend your assets to third parties, and some may even directly invest in your holdings.
Despite the diversity in their approaches, they share a common goal: to turn a profit from these ventures and distribute a portion of it back to you as regular interest payments on your cryptos. In this Cryptopolitan guide, we’ll explore top crypto savings accounts to keep your holdings in 2023.
What are Crypto Savings Accounts?
A crypto savings account provides a platform where you can deposit your digital tokens and accrue interest over time. This kind of service is typically provided by various entities in the cryptocurrency space, including exchanges, lending platforms, and staking businesses — think big names like Binance, Nexo, Coinbase, BlockFi.
These accounts are the cryptocurrency world’s answer to the traditional savings account. The crypto assets you tuck away in one of these accounts generate interest for you, just as a regular savings account would with fiat currency. Plus, in the same way you can always withdraw funds from your bank savings, your cryptocurrency remains accessible and is not bound by any fixed holding periods.
How Do Crypto Savings Accounts Work?
The advent of crypto savings accounts is a response to the often intricate and intimidating nature of direct engagement with complex crypto protocols. For those looking to avoid their cryptocurrency assets idly gathering virtual dust and prefer to see some growth, crypto savings accounts present a streamlined alternative. Much like how a traditional bank operates with your savings, the organizations offering crypto savings accounts use your digital currency to lend, invest, or stake, then share a portion of their earnings with you as regular interest income.
Exchanges such as Coinbase and Binance, along with specialized firms like BlockFi, Celsius, and Nexo, are players in this field, offering such services with varying interest rates and conditions for their customers. These terms can include different annual returns, specified periods during which funds must remain deposited (lock-up periods), and the frequency of interest payouts.
Consider BlockFi as an illustration. This lending behemoth has drawn in assets exceeding $10 billion from its million-plus client base. They propose variable interest rates that can soar up to an 11% annual percentage yield (APY). On the other hand, flagship cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) attract more modest rates, peaking around 3%. In contrast, stablecoins such as Gemini Dollar (GUSD) boast interest rates at the 11% mark, while alternative coins—affectionately dubbed ‘altcoins,’ like Cardano (ADA), Solana (SOL), and Avalanche (AVAX)—can yield interest rates around 10%.
In the world of crypto savings accounts, you could snag a sweeter deal on interest rates by agreeing to certain conditions. This could involve setting your crypto aside for a predetermined period, known as a lock-up, or owning tokens specific to the platform you’re using. Take Nexo, for example; it boosts your interest rate by as much as 4% if you have some of their native governance token, NEXO, in your wallet. Other companies like Binance and Crypto.com also incentivize users with higher interest rates for those willing to commit their tokens for several months. It’s worth noting, though, such arrangements you lose the flexibility to sell your crypto promptly should the market take an unexpected dip.
However, it’s important to exercise caution and stay informed, as some of these offerings have come under the watchful eye of regulators. BlockFi and Celsius, for instance, have felt the heat of regulatory scrutiny. In a landmark case, BlockFi settled for $100 million in fines with U.S. regulators in February 2022. The reason? Its BlockFi Interest Account was operating like a securities offering. Consequently, BlockFi has since ceased offering these accounts to individuals in the United States.
Top Crypto Savings Accounts In 2023
XETA Genesis: 20% Monthly Compounded Growth
XETA Genesis bridges DeFi and TradFi within a crypto interest account, offering up to 20% monthly returns with a notable consistency compared to other accounts. In operation for over 480 days, it has amassed $62M in assets, delivering $44M in returns to its users.
Investors need a minimum of $250 to start, and they must set up a Genesis account for access and security, which also ties into an integrated dashboard for monitoring investments. The platform charges a $25 monthly fee and a 2.5% withdrawal fee, but notably doubles the membership fee as a return to the investor.
Catering to a broad audience, including individuals, day traders, and institutions, XETA Genesis offers a regulated and secure way to manage and maximize crypto investments with a combination of off-chain revenue movement for security and a straightforward management interface.
LEDN – High QuHigh-Quality Savings Account
LEDN is a standout crypto lending and savings platform, providing secure yields on Bitcoin and being recognized as the best crypto savings account available. It adjusts Bitcoin yields monthly according to market trends, decreasing from 6% APY during the bull market to 1.5% APY currently.
For USDC, LEDN offers a stable 9.5% APY, generating returns by lending user funds to multiple crypto firms, avoiding reliance on any single entity. The platform also provides Bitcoin-backed loans at 10.9% APR without credit checks, requiring double the loan value in collateral. If collateral value drops too much, loans are liquidated to manage risk.
Even during the 2022 market slump that affected similar platforms, LEDN stayed resilient, honoring withdrawals and avoiding operational freezes, despite some exposure to Alameda Research.
Paybis – A Crypto Trading Platform Supporting 150+ Assets
Launched in 2016, Paybis has established itself as a user-friendly cryptocurrency trading platform, boasting a selection of over 150 crypto and fiat currencies available for purchase. Its focus on straightforward fiat transactions makes it an ideal choice for newcomers to cryptocurrency.
Paybis also prioritizes security, bolstered by its licensing under the FinCEN Department of the Treasury in the USA and compliance with EU regulations. The platform ensures safety through SSL encryption and two-factor authentication. Paybis wallet users benefit from enhanced security measures, including triple-layer storage protection and private key access.
The platform’s global reach extends to over 180 countries and 48 US states, offering simplicity for those looking to directly buy and sell cryptocurrencies without engaging in complex trading. Although it doesn’t feature trading pairs, Paybis’s streamlined trading functions are well-suited for straightforward crypto transactions.
YouHodler – 30+ Cryptos for Saving and Borrowing
YouHodler combines a crypto exchange with a high-yield crypto savings account, supporting over 30 leading cryptocurrencies for both saving and borrowing, such as Bitcoin, Ethereum, and Tether.
Offering competitive rates in the crypto savings sphere, YouHodler provides up to 7% APY on Bitcoin, with weekly payouts. The platform operates by lending out user deposits to generate yield and requires a minimum deposit of $100. Additionally, it offers crypto-backed loans, dispensable in fiat or stablecoins, with interest rates that vary according to the loan’s terms, the cryptocurrency involved, and market conditions.
While there are caps on the amount of deposit that can earn yield in YouHodler savings accounts, users have options to increase these earning limits.
For security, YouHodler employs several third-party services: Elliptic for blockchain analysis and risk assessment, and a combination of Ledger’s technology and a Lloyds of London syndicate via Arch UK for fund protection and crime insurance.
Binance – Huge Range of Yield-earning Products
Binance, the world’s premier crypto exchange, presents a wide range of crypto financial services, including a versatile savings account feature.
Through Binance Earn, holders can increase their crypto assets by staking or lending them, or by participating in Binance’s Launchpool, which involves staking in DeFi liquidity pools for rewards.
Additionally, Binance’s Dual Investment options allow users to commit their cryptocurrency with the potential to automatically execute a “buy low” or “sell high” strategy when the asset’s price hits a predetermined target on a chosen date. If the target price isn’t met, users retain their cryptocurrency while still earning a return.
With 346 different “Simple Earn” products, Binance stands out for its vast selection, catering to a wide range of risk preferences with both principal-guaranteed and non-guaranteed options. Although the yields for popular coins like Bitcoin may not be the highest, Binance is still a strong contender for those seeking diverse crypto savings opportunities.
Crypto.com – Top Rates for CRO Investors
On Crypto.com, investors have the opportunity to earn returns on 21 different cryptocurrencies and stablecoins, with the rates influenced by factors such as CRO stake, lock-in duration, membership level, and investment size.
For example, Bitcoin investors might receive a 0.6% APY on a one-month lock-up of $5000 worth of BTC without any CRO stake. Conversely, a 3.5% APY is achievable with a three-month lock-up of $3,000 in BTC and a minimum of 50,000 CRO staked.
Additionally, Crypto.com grants an extra 2% APY on all savings plans to private members who have its premium Obsidian Black, Rose Gold, or Icy White cards, with the bonus paid out in CRO tokens.
For tier 1 rewards, Bitcoin and Ethereum savings peak at 1.5% and 2% APY for ordinary users, while USDC earnings top out at 6.5% APY.
Coinbase – Crypto Savings Accounts for US Customers
Coinbase, a prominent cryptocurrency exchange, provides a staking platform named Coinbase Earn, enabling patrons to accrue earnings on their cryptocurrencies. This is achieved by allocating their holdings to support the security and operations of the associated blockchain networks, thereby collecting rewards.
Staking Ethereum via Coinbase Earn yields approximately 3.83% annually, whereas staking Solana (SOL) brings an annual percentage yield (APY) of 2.4%. Moreover, other proof-of-stake cryptocurrencies, like Avalanche and Polkadot, currently offer 7.82% and 14.2% APY, respectively. Coinbase extends staking options for 120 different digital assets.
Coinbase has indicated that these yield rates are provisional, depending on the estimated protocol rate, and they may be adjusted.
In partnership with Circle, the USDC stablecoin, Coinbase also conducts a loyalty scheme with a 2% yield for clients who keep their USDC on the platform. This benefit is generated from Coinbase, not through lending or staking practices, and is subject to future alterations. However, this may present a more secure choice for stablecoin earnings, catering to investors wary of potential losses through lending services.
Coinbase has publicly declared its readiness to enter a legal battle with the SEC should it face litigation for its staking services, suggesting that these services could continue to be accessible for some time, including to customers in the United States.
Why consider crypto savings accounts?
Certainly, the primary benefit of decentralized finance (DeFi) is its inclusivity, providing access to financial services typically reserved for institutional investors in the conventional financial system.
Many DeFi protocols outshine corporate-managed savings accounts by offering significantly higher returns, with potential yields reaching up to 20%. However, they may present a challenge to navigate for those new to the space. To bridge this gap, services such as Argent Wallet and Zapper offer user-friendly applications that make interacting with DeFi protocols as straightforward as managing a crypto savings account.
If both a crypto savings account and a DeFi protocol ultimately serve the same purpose, why would someone prefer the former? For many, the deciding factors include ease of use and risk management. While platforms like BlockFi might face financial challenges if they lend assets to unreliable parties, they have committed to prioritizing depositor reimbursements in the event of bankruptcy. Furthermore, some entities, such as Nexo, bolster their reliability through insurance and partnerships with reputable custodians like BitGo.
The volatility of DeFi protocols was evident in May 2022, with a platform like Anchor facing difficulties after the UST token’s value plummeted. Since then, Anchor has considered reducing its yield from an average of 19.5% to just 4%, a significant decrease. It’s important to recognize that platforms like Anchor operate without regulatory oversight and do not provide assured rates or deposit protections.
Having learned about the mechanisms of crypto savings accounts, we have explored the different services available. The interest rates and any requirements to hold your investment for a set period can differ between platforms. Prioritize selecting a service that feels user-friendly and trustworthy, ideally one with a longstanding presence in the market and a robust track record. Review their terms and conditions thoroughly and look for services that offer insurance on deposited funds.