The lack of regulation and dramatic price fluctuations makes cryptocurrency a very risky investment. But along with the massive profits that you can potentially make in the crypto world, what if there was a way to get an added boost to your crypto investments? This boost is possible from crypto savings accounts that offer 10% or more on your deposit returns.
But before we delve into the top 11 crypto savings accounts, let's take a look at what a crypto savings account is, how they work, and the criteria you should be aware of before choosing the best crypto savings account for yourself.
What Is A Crypto Savings Account?
Crypto savings accounts are comparable to traditional savings accounts. You put crypto assets into your crypto savings account, which are then lent on your behalf by a third party. The difference with a traditional account is that instead of dealing with fiat currency you will keep your funds in the cryptocurrency of your preference. In order to earn money on crypto, the first thing you have to do is to open an account.
How Does A Crypto Savings Account Work?
As discussed earlier, crypto savings accounts work similarly to traditional savings accounts. In the case of a traditional savings account, when you deposit money, you give permission to the bank to loan out the money to third parties. And in return, you earn interest from the bank.
Similarly, when your money is invested in cryptocurrencies like Bitcoin or Ethereum, the cryptocurrency savings account provider will loan out the crypto to borrowers, and provide you a certain pre-arranged rate of interest on your crypto. The interest rates depend on many factors like the current market rate.
You can also earn interest on Stablecoins, which are fixed to the value of the US dollar if you don't want to be exposed to cryptocurrency price fluctuations.
How To Choose A Crypto Savings Account?
With the rising popularity of cryptocurrency, there has also been an increase in the number of cryptocurrency savings accounts providers. But how do you know which platform is the best choice for your investment needs?
Here are some of the points you should research before selecting a cryptocurrency savings account:
- Compound interest
- Crypto assets availability
- Crypto key access policy
- Loan-to-value (LTV) rates
- Restrictions on withdrawal
- Supported coins
There's a general assumption that if you save crypto to a savings account, you'll earn compound interest, but that is not always true. Even though you will gain interest on your initial deposit, the final amount will be far less than what you'd earn if the interest is compounded.
So before choosing a cryptocurrency savings account, it is recommended to inquire whether or not they apply compound interest to their savings accounts.
Crypto Assets Availability
It is preferable to choose a savings account that has crypto market access. This will help you buy crypto through the platform and set up your account. Having access to the market also saves a lot of time and documentation.
Crypto Key Access Policy
Unlike a traditional savings account wherein the entire money belongs to the account owner, crypto-based savings accounts are a little complicated. In such accounts, the crypto keys are loaned to other users who can use the deposited crypto for a certain period of time, while promising to pay the account owner interest in return. Thus, it is recommended to always verify the company policy related to crypto key access and understand ownership swapping.
Loan-To-Value (LTV) Rates
Another important point to research is the loan-to-value rates or the LTV rates. The LTV rates represent what the platform is ready to risk. It must be noted that the more robust LTV a platform has, the better it is for you.
One of the most important aspects of choosing a crypto-based savings account is its security measures. Every company has its own security policies to safeguard the assets you save, so it is recommended to look for savings account providers who offer two-factor authentication (2FA).
Why is this important? Because, unlike traditional savings accounts, crypto-based accounts do not offer Federal Deposit Insurance Corporation or FDIC insurance in short. This is why the financial stability of the account provider is important. Apart from 2FA, many companies also provide cold storage as an additional layer of security.
Thousands of cryptocurrencies are available in today's market, and there's nothing worse than selecting an account provider that doesn't support the coins you're dealing with. Before you deposit your crypto in an account, please be sure to verify that the company supports that crypto.
11 Best Crypto Savings Account Of 2023
Let's have a look at the best crypto savings accounts providers of 2021:
- BlockFi- Best Overall
- Nexo- Best For Daily Interest
- Gemini- Best For Security
- Coinbase- Best For Beginners
- Celsius Network- Best For High Yield Crypto Savings Account
- YouHodler- Best All In One
- Linus- Best For Liquidity
- Crypto.com- Best Variety Of Supported Currencies
- Outlet Finance- Best For US Dollar Dealing
- Coin Loan- Second Best For Security
- Hodlnaut- Second Best For Liquidity
1. BlockFi- Best Overall
Founded in 2017, BlockFi is a crypto savings account that recently reached a fund of $350 million. BlockFi now has a valuation of $3 billion.
BlockFi has no minimum deposit amount and you can earn up to 5% APY on Bitcoin and 8.6% APY (annual percentage yield) on stablecoins. This is one of the highest returns that one can get in their crypto saving account.
BlockFi has collaborated with Gemini to provide effective security measures. Apart from that the platform also grants crypto loans with low interest rates (about 4.5% per year). All of these features make BlockFi an incredible overall choice for a cryptocurrency savings account.
2. Nexo- Best For Daily Interest
Since its inception in 2017, Nexo has earned over 1 million users. But what makes Nexo so special?
Nexo boasts a high yield of interest, as high as 12% APY, on a wide range of cryptocurrencies. It also has a minimum lock-up time of fewer than 24 hours, which means that the interest is paid on a daily basis. Another great feature of Nexo is that it neither has a minimum deposit amount nor monthly fees. The platform also has security measures like two-factor authentication (2FA), login alerts, and withdrawal confirmation.
3. Gemini- Best For Security
Since its inception, Gemini has best been known for its unbeatable high-level security. When a certain amount is deposited, a vast majority of it is stored offline, in an air-gapped cold storage system, and only a small amount is stored in hot wallets. This minimizes the chances of theft and malware attacks. Gemini also provides two-factor authentication (2FA) and bug bounty to prevent hacking. According to reports, Gemini has secured the highest amount of insurance, around $200 million.
4. Coinbase- Best For Beginners
One of the most well-known names in crypto wallets as well as holding and trading cryptocurrency, Coinbase, also caters as one of the best crypto savings accounts for newbies. Coinbase does not loan out the currency that you invest in, and this is what makes it a great alternative to traditional banks because there are fewer restrictions when it comes to funding withdrawal.
5. Celsius Network- Best For High Yield Crypto Savings Account
Celsius Network boasts exceptional rates and sign-up rewards. It offers about 17.78% reward rates to users in its loyalty rewards program, which is unfortunately not available to U.S. residents. The APY for U.S. citizens starts from 2.50% on 14 cryptocurrencies. The Celsius platform prevents withdrawals using HODL mode and has security measures such as 2FA and offers crypto-backed loans.
6. YouHodler- Best All In One
YouHodler is more than just a crypto savings account. The platform allows its users to access their funds and offers outstanding APYs on almost 22 cryptos. The platform focuses on long-term cryptocurrency holdings and offers a rate of return somewhere between 3% to 12.3% depending on the type of crypto. Another great thing about YouHodler is that you can start with a minimum investment amount of $100.
YouHodler keeps your digital assets secure with insurance, two-factor authentication, withdrawal stopping feature, and by using a combination of hot and cold storage. It also has bonus features like crypto-backed loans, margin trading, and it also supports NFTs.
7. Linus- Best For Liquidity
If you're looking for crypto-based savings account with high yields rate and limited restrictions on withdrawals, Linus might be your best bet. Unlike other cryptocurrency savings accounts, the platform differentiates itself by allowing users to withdraw their funds penalty-free, at any time.
Linus offers a decent 4.50% APY on the crypto you deposit and generates interest by letting your assets be borrowed via smart contracts.
8. Crypto.com- Best Variety Of Supported Currencies
With more than 35 cryptocurrencies and stablecoins, such as TrueUSD, Chainlink, Bitcoin, Tether, Ethereum, and others, Crypto.com is rightly pegged as having the best variety of supported currencies. Apart from its wide range of stablecoins and altcoins, it offers daily interest rates ranging from 6.5% to 12%. The rate of return varies depending on the type of crypto investment that you hold.
9. Outlet Finance- Best For US Dollars
If you do not have a lot of knowledge of cryptocurrencies but are willing to dive into the crypto space, Outlet Finance might be the best option you have. It is a beginner-friendly option as they only deal in US dollars, where investors can deposit their funds in US dollars and also earn interest in US dollars.
The platform functions by lending out your dollars to buy Ethereum and other cryptocurrencies. The company offers interest rates of about 9% on USD.
10. CoinLoan- Second Best For Security
CoinLoan ranks next to Gemini when it comes to the safety and security of your digital assets. Apart from their security features, CoinLoan also offers about 17 types of cryptocurrencies offering APYs between 5% to 12.3%, which vary depending on the type of cryptocurrency. The interest is offered monthly.
CoinLoan does not have a minimum deposit requirement.
11. Hodlnaut- Second Best For Liquidity
Earning interest is simple with Hodlnaut as it offers one of the highest interest payments on your crypto holdings. It boasts 6.2% to even 12.73% interest and has no minimum deposit or lock-in period. This Singapore-based crypto savings account currently accepts 5 cryptocurrencies including Bitcoin, Dai, Ethereum, USD Coin, and Tether.
One great thing about Hodlnaut is that the interest is paid every Monday, that is, it offers weekly interest payments.
The Bottom Line
Finally, the most important question—Are crypto savings accounts worth opening? Keeping in mind crypto market volatility, if chosen wisely, crypto-based savings accounts can provide pretty good long-term returns.
Many platforms provide good interest rates on crypto and also a few high-yield crypto savings accounts. But needless to say, it all depends on the choices an investor makes in terms of the coins they choose, the duration of their investment, and their risk-taking ability.
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