10 Best Crypto Based Savings Account – Know Risk Factors

What are the best crypto based savings account? Earnings from cryptocurrencies can be quite significant even if the value of Bitcoin and other crypto assets are down temporarily.

Critics, experts, crypto traders and investors always have a high hope and are very optimistic about the future of cryptocurrency which is why they avail one or more avenues to earn the maximum from it.

One of the productive ways is to create a crypto savings account. These accounts will offer an added income on your holdings in the form of interests.

There are a few prominent players in the crypto market who even go a step ahead and opine that the crypto savings account may provide you with returns that will put most of the traditional banks to shame.

There are several such accounts out there that will vary in several different aspects such as:

  • The rate of interests offered
  • The minimum deposits required to make
  • The type of currencies accepted and
  • The lock-up periods.

All these are variable rate savings accounts and may also change at any time without any prior notice.

Remember, these crypto savings accounts are not a good place to hoard your emergency funds that you can convert to cash when needed very quickly.

These accounts are also not for those who are conservative savers and believe in traditional savings accounts, CDs, and other money market accounts.

10 Best Crypto Based Savings Account

Best Crypto Based Savings Account

If you have a considerable amount of cryptocurrencies and do not want to just ‘HODL’ them, it is a great idea to move them into a crypto savings account. You can choose one of the best accounts to get a high yield.

However, with all that said about this exciting product, there are also some risks underlying and are typical about these crypto savings accounts, which are seldom found in the accounts with a traditional bank.

That is why you should choose one for you carefully so that you get a high yield.

Here are a few of them that offer reasonable returns.

1. BlockFi – Best Overall

This is one of the best places overall where you can open your crypto savings account. You can expect a high APY as well as bonus offers of crypto assets from time to time, depending on your deposit amount.

Usually, they offer about 8.6% Annual Percentage Yield on stablecoins and about 5% APY on bitcoin. However, you can visit their website to know more about the APYs offered by them at different tiers and for different crypto coins.

Founded in 2017, BlockFi is one of the best crypto custodians funding millions of dollars that has raised its valuation to $3 billion as of March 2021.

As of now, this platform accepts deposits in BTC, LTC, ETH, PAXG, USDT, USDC, GUSD, and PAX and offers pretty high yield.

They lend crypto assets to corporate and reliable institutional borrowers for a fixed period only on overcollateralized terms.

They have an automatic risk management system to monitor the positions around the clock.

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2. Coinbase – Trusted by Beginners

If you are a beginner and have amassed quite a lot of USD coins, you can rely on Coinbase to save them in their account.

You can earn an interest of up to 1.25% on your coins but to know the latest figures you should visit their official website.

The good thing about Coinbase, which is also one of the best and most trusted exchanges for trading and holding crypto coins, is that they impose less restrictions on withdrawal of funds. They also do not lend your coins to borrowers.

3. Celsius Network – Offers High Returns

If you are looking for high yield as well as bonuses, the Celsius Network is the one you should choose, Right from offering sign-up bonuses to high interest rates and rewards, they offer the best.

The APY rates offered by Celsius can go as high as 17.78%, while the low being 2.50%. .

They also pay rewards in tiers through their Loyalty Rewards Program in CEL tokens, their native currency. However, this rewards program cannot be availed by the US residents as of now.

The good thing about Celsius is that they do not have any minimum deposit requirements. And, they pay the interests on your deposits weekly.

4. Linus – Withdraw with No Fees or Restrictions

If you are looking for liquidity, Linus will offer it along with a reasonably high rate of return on your savings account. You will also have easy access to your account and can even withdraw from it at any time.

If that was not all, Linus will not impose any restrictions or charge any fees on your withdrawals, even if you do so before the date specified.

As for the interest on your savings, you can earn up to 4.5% on your deposit, but do check their website for latest updates.

They usually generate interest on your deposits by lending the coins to the borrowers through smart contracts.

And, if you want any assistance at any point of time, you can chat online with humans as well.

5. Crypto.com – Accepts Widest Range of Crypto Coins

Known for their diversity, Cryypto.com is the best place to invest your holdings and earn an APY anywhere between 3% and 14%.

This means that if you currently hold some coins that are not the common ones but want to earn interest on them, this is the place you should go to.

In fact, as of now, they accept 8 stablecoins and 26 other types of crypto coins.

The stablecoins can provide a return as high as 13% on your deposits and on all other cornerstone coins you can earn 6.5% APY.

They calculate simple interest daily on your deposits and add it to your account on a weekly basis.

The actual rate of interest offered by them will depend on the terms and conditions of your deposit.

However, the terms and conditions are quite flexible, and you can withdraw anytime.

6. Nexo – Limited Lockup Period

If you want faster payment and a limited lockup period of 24 hours for your savings account, Nexo is the one you should go for. You can earn a reasonably high rate of interest up to 12%. This is paid daily into your account.

This platform was launched in 2017 but within a span of 3 years it boasts to have more than a million users and over $100 million in the form of insurance on all assets held.

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The best part is that you will not have to pay any monthly fees to open or run your account and not have to make any minimum deposit as well.

7. Outlet Finance – Good for Novice

Since Outlet Finance deals in US dollars, you can use their account to deposit as well as earn interest in USD.

This is a good platform for the novices because they need not know much about the trends in the cryptocurrency market.

However, they can still earn quite a considerable amount of return, which can be as high as 9% APY.

Typically, they will convert your deposits into stablecoins before connecting it with the lending partners.

All loans are overcollateralized and matched perfectly so that it produces the highest yields, at any cost.

Since it is overcollateralized, it will mitigate your risk of losing your deposit.

The borrowers need to put up 120% for their loans which means that if ever they default, it can be liquidated to get the lost money back.

8. YouHodler – Good for Long Term Holders

The Swiss company YouHodler is a well known and reliable name among the crypto investment community which is a good place to hold the coins and not sell them. This is actually beneficial for the long term crypto holders.

The platform offers an APY ranging between 3% and 12% which adds up a substantial amount to the holdings.

However, the rate offered will depend on the type of currency deposited. And, you can start by making a deposit as little as $100.

You will get everything from this platform whether it is easy access to your funds or liquidity and high yields on your investments.

They accept as many as 22 different types of crypto coins from people who open a savings account with them and pay interest on them every week.

9. Gemini – Security First

Your money will be secure here because Gemini focuses on security primarily. The major portion of your deposit is stored in their cold storage system.

This offline system will prevent the hackers from accessing your account and stealing your assets. There is also no risk of malware.

The platform only uses a small portion of the amount deposited by you and holds it in their online hot storage. The best part is that even this small portion is insured.

Paying interest on your deposited amount daily to the tune of 1.54% and up to 7.40% APY depending on the type of currency, this is a good place to open a crypto savings account.

10. Hodlnaut – Good for Liquidity

Hodlnaut is the place to go if you are looking for better liquidity. This Singapore-based company however only accepts 5 types of crypto coins such as BTC, ETH, DAI, USDT and USDC.

Interests on your deposits are paid out every Monday and their APY ranges between 6.2% and 10.5%, varying with the type of currency deposited.

However, be informed that Hodlnaut does not have regulatory licenses as of now in Singapore.

Variables That Affect the Earnings from a Crypto-Based Savings Account

The overall amount that you can earn from a crypto savings account will largely depend on two specific factors. These are:

  • The rate of interest paid by the account and
  • The price of the crypto coin compared to the base currency.

The APY or rate of interest offered by the saving account will vary but that will depend on a variety of factors.

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Of these two, the second factor is most important. This is because you cannot do anything about the price fluctuations of a crypto asset and your risk will be even more if you hold the coins in your savings account for a longer period of time.

In a situation where the value of the coin or coins you are holding in your savings account goes down and your account is still active, you may even lose a substantial amount of your principal.

This is due to the fact that cryptocurrencies are extremely volatile, risky and un-regulated as opposed to the fiat currencies that are backed by the government.

Risk Factors of a Crypto-Based Savings Account

In spite of offering a large variety of benefits, the crypto savings accounts do come with a lot of risks or varied types that may result in a loss on your investment. It is good to know these and act accordingly. Here they are.

There is a considerable risk of the exchange rate of the coin going down compared to the base currency because it is not a legal tender and not backed by the government.

Also, the accounts you are holding your coins in do not come with any guarantee from FDIC or SIPC.

The stablecoins that are decentralized have a risk of peg breaking since these are primarily managed by computers and computer codes and not by humans.

Therefore, there can be errors. This will result in the relative value of the stablecoins not being able to keep up with another comparative asset.

If you choose a more flexible account over a strict one, you will earn a lower rate of interest.

On the other hand, the accounts that have a stringent lockup period will offer higher rate of interest but then there may be added fees charged for excessive withdrawals.

In these crypto savings accounts, you actually pledge your coins as collateral and in case the provider cannot run the account anymore due to some unfavorable market events or mismanagement in their business, you will not get the coins back.

This is because you lost your ownership of the coins when you deposited them.

If you take a loan, it will be overcollateralized but if the market price of the coins falls very fast and very low, you may not repay the loan and run into loan defaulter risk.

Then there is also the risk of hacking the account itself wherein all your crypto coins may be stolen. This may happen in the crypto savings accounts with the exchanges even more if the security measures are not very strong.

Finally, any prior error in the smart contract or automated coding that is undiscovered may also result in hacking the account. This may also result in losing your fund.

Conclusion

Though the crypto savings accounts are comparatively new compared to the currency itself, the rate of return that they provide can be really alluring.

However, always read the terms and conditions of each of them while choosing.