Many novice investors on the cryptocurrency scene don't realize that you can earn interest on your cryptocurrency holdings - similar to a bank account. However, unlike a traditional bank account, you will have access to much more attractive returns.
In this guide, we will discuss the best cryptocurrency accounts in terms of popularity, tokens supported, annual APY interest rate, blockchain terms and more.
1. Aqru - the best interest-bearing cryptocurrency account in 2022
As one of the best "yield farming" cryptocurrency platforms, Aqru offers some of DeFi's best interest rates and a one-stop-shop for all of your Earning interest on cryptocurrencies.
Regardless of your experience in the field, Aqru's website is user-friendly and jargon-free, allowing you to get set up in less than 10 minutes from start to finish. After researching the platform, we found that Aqru offers support for both stablecoin and conventional cryptocurrencies.
As for the former, this includes USDT, USDC and DAI. As for supported cryptocurrencies, you can make money on the two largest digital currencies in terms of market capitalization - Bitcoin and Ethereum.
And in terms of the returns offered, stablecoins provide the highest APY rate at 12% per year . If you deposit Bitcoin or Ethereum into your Aqru account, a smaller but still competitive APY rate of 7% is offered. Importantly, regardless of which digital asset you choose to generate interest on, your wages will be paid daily.
This allows you to grow your cryptocurrency portfolio faster, as you can choose to reinvest the interest back into your Aqru cryptocurrency account. What's more, we like the fact that all Aqru savings accounts are flexible, so you can withdraw your tokens at any time.
Perhaps the main drawback of this provider is that compared to other cryptocurrency accounts on the market, the number of supported cryptocurrencies is somewhat limited. Nevertheless, AQRU gives you the opportunity to invest Bitcoins and earn 7% interest.
Check -Aqru platform review
We also like Aqru for its simple and fair pricing model. This means that the APYs you are offered do not include any commissions, so you will receive the full amount due to you. On the other hand, the downside of the platform is a $20 fee for cryptocurrency withdrawals, which you should consider. Finally, if you are the type of investor who is looking for top-notch customer service, Aqru offers live chat, which allows you to speak with a team member in real time.
2. Crypto.com - Earn up to 14.5% per year in interest on "Stablecoins"
Next on our list of top enabling accounts earning interest on cryptocurrencies is Crypto.com. This online platform offers a range of services, from cheap cryptocurrency exchanges where you can buy cryptocurrency, the NFT marketplace, education, cryptocurrency debit cards backed by digital assets and much more.
When it comes to cryptocurrency savings accounts, the platform supports dozens of cryptocurrencies. It includes not only stablecoins, but also many large- and mid-cap cryptocurrencies.
In terms of profits, Crypto.com allows you to earn up to 14.5% per year on stablecoin deposits. However, this attractive APY rate depends on the deposit period and whether or not you put up CRO tokens, which is characteristic of the Crypto.com website.
For example, suppose you want to pledge a stablecoin such as Tether. To get the maximum benefit, you need to pledge at least 40,000 CRO tokens and lock up the funds for three months. Alternatively, if you want to earn interest on Cardano and Ethereum, Crypto.com also gives you that option.
However, if you switch to a flexible lock-up period and decide not to pledge any CRO tokens, the rate of return drops to 6%. This is still very competitive when you consider that banks rarely offer APYs on flexible cash balances of more than 0.10% per year.
In addition to a strong stablecoin offering, Crypto.com also offers savings accounts for currencies such as Bitcoin Ethereum, Litecoin, Bitcoin Cash, Stellar, EOS, Cardano, Chainlink and others. To learn how to earn cryptocurrency rewards with a Crypto.com credit card, be sure to check out our full review.
Note that although, as with Aqru, your interest will be paid daily, with Crypto.com the rewards will not accumulate. Therefore, you will have to manually reinvest tokens to take advantage of the long-term accumulation strategy.
Nevertheless, another reason we like Crypto.com is that you can access your cryptocurrency investments at any time via your Crypto.com debit card. This means that you can, for example, withdraw cash from an ATM and the funds will be deducted from your account with interest in cryptocurrencies.
3. BlockFi - a secure cryptocurrency account to earn 4.5% per year on Bitcoins
BlockFi is a specialized cryptocurrency savings and lending platform that allows users to engage in financial services without going through a traditional bank. Most importantly, we have found that BlockFi offers one of the safest opportunities to earn interest from cryptocurrency investments for several key reasons.
First and foremost, BlockFi has agreed to bring its platform into compliance with the SEC's Investment Company Act of 1940 regulations.
In simple terms, this will offer BlockFi users much greater protection in terms of investment risks.
Second, BlockFi has an insurance policy with BitGo, which provides investors with protection up to a certain amount should the platform experience a hack. In addition, BlockFi holds its digital asset funds with Gemini, which is itself regulated by the New York State Department of Financial Services as a trust company.
In addition to offering a safe and secure (but not risk-free) platform, BlockFi is home to dozens of supported cryptocurrency assets - all of which can generate interest via cryptocurrency loans. Topping the list is the 4.5% APY that can be earned on Bitcoin deposits. Ethereum is slightly more competitive with BlockFi, where the APY is 5%. If you're looking for an even higher rate of return, Cosmos and Polkadot pay 7% and 9.5%, respectively.
Like Crypto.com, BlockFi offers a number of other products and services on its platform. For example, if you want to increase your exposure to a particular cryptocurrency investment, the platform offers real-time cryptocurrency loans. The amount of the offer will depend on how much collateral you are able to place. BlockFi also offers one of the best cryptocurrency wallets for beginners, which comes in the form of a mobile app.
4. Binance - the best cryptocurrency account with high profits
Binance is home to the largest cryptocurrency ecosystem in the world. Its main exchange not only attracts the most daily trading volume in the market, but the platform also offers debit cards, leveraged products, educational courses, loans and its own native digital currency, BNB.
Moreover, Binance also offers one of the best cryptocurrency investment platforms in terms of supported cryptocurrencies and rates of return.
In fact, if you want to make money on cryptocurrencies outside the top ten in terms of market capitalization, you will get phenomenal APY(annual interest rate).
For example, at the moment it is 104% on Axa Infinity, and you can earn 21% on NEAR. On Luna and Polkadot, you can earn 12% and 18%, respectively. Note that, as with other cryptocurrency accounts on the market, specific interest rates also depend on the terms of the blockchain.
For example, while the aforementioned Axie Infinity offers 104% with a 90-day lock-in period, this value is reduced to 25% with a 7-day plan. If you are more interested in large capitalization projects, you can earn up to 5% APY with a Bitcoin deposit.
And best of all, it's a flexible savings account - so you can withdraw your BTC tokens at any time. Another way to grow your cryptocurrency portfolio passively on Binance is to cryptocurrency staking.
The platform supports dozens of staking cryptocurrencies with different interest rates and lock-up conditions - so it's worth checking out. In addition, it should also be noted that Binance offers very low transaction fees of just 0.10% .
This is important because it is easy to buy cryptocurrency through the Binance exchange to earn interest.
Finally, Binance allows you to view the performance of your cryptocurrency interest account in real time - both online and via the cryptocurrency mobile app.
5. Coinbase - A user-friendly way to earn interest on cryptocurrencies
Although Coinbase halted its cryptocurrency interest accounts last year, the popular exchange still allows users to earn passive income through its staking platform.
If you are not familiar with staking, the basic process is the same as for a cryptocurrency interest account. This is because when staking on the Coinbase website, you will have to lock your cryptocurrency tokens for a certain period of time.
During this time, Coinbase will pay you rewards in the form of interest. Note that only six tokens are currently supported by Coinbase for staking.
The highest interest rate is offered on Cosmos at 5%, while Ethereum brings 4%. Tezos and Algorand pay 4.64% and 4%, respectively, while Dai and USDC pay just 2% and 0.15%.
To qualify for staking on Coinbase, you must have a verified account .
If you like the idea of Coinbase and want to use the exchange for passive income, you have two options to get started today.
First, if you already have an eligible cryptocurrency, you can transfer tokens to Coinbase. If you don't currently have any cryptocurrency, you can purchase directly from the Coinbase website. It will cost you 3.99% using a debit or credit card and 1.49% via ACH.
Earning interest on cryptocurrencies - how does it work ?
Usually, when you invest in cryptocurrencies, you only make money if the value of the token increases and you decide to sell. However, since then, a type of investment has completely emerged in the blockchain market called cryptocurrency savings accounts.
As the name suggests, they work similarly to traditional bank accounts in that you deposit funds and receive interest. As with traditional financial institutions, some cryptocurrency accounts come with blockchain terms, while others offer flexible withdrawal policies.
What's more, the specific cryptocurrency you deposit will affect your interest rate - as will your choice of provider. Therefore, it is important to do a lot of research in your search for the best accounts with interest on cryptocurrencies.
Therefore, before you start looking for the highest returns on your preferred cryptocurrencies, it's important to understand how platforms are able to pay you interest on a digital asset class that only generates capital gains.
How do cryptocurrency interest accounts pay interest?
In the vast majority of cases, your chosen cryptocurrency account provider is able to pay you interest on your idle cryptocurrencies through a centralized lending model. Simply put, when you deposit cryptocurrencies on the platform, the provider uses those funds to facilitate loans for those who want to borrow capital.
Let's look at a basic example of how this might work:
- You deposit $1,000 worth of bitcoin into a cryptocurrency account with interest
- Your chosen provider offers 5% with a 3-month lock-in period. Therefore, you will not be able to withdraw tokens before the 3-month period expires.
- The $1,000 you deposit is then used to fund cryptocurrency loans. For simplicity's sake, we'll say that the user pays an interest rate of 7% per year.
- After three months, the user gets his $1,000 in Bitcoins back.
- In addition, you also generated 5% of interest, which amounts to 12,50$ in 3 months of lock-up.
There are several important points to note in the above example. First of all, the example was based on a 3-month lock-up period. However, this is not the industry standard, as the top cryptocurrency account providers we encountered offer different terms. Many offer flexible accounts that allow you to withdraw cryptocurrencies at any time.
In addition, you will quickly notice that since the interest is paid by the user who borrows the funds, this in itself is a risk. After all, if too many users on a given platform default on their cryptocurrency loan repayments, you may end up getting back less than you originally invested.
Which platforms offer the best interest rates on cryptocurrencies?
If you are looking for the best platforms in terms of interest rates for cryptocurrencies, they do indeed vary. For example, while one platform may offer a more competitive rate for Bitcoin, its interest rate for Ethereum may not be as attractive.
Therefore, it is really important to shop around to find the best deal for your needs.
Nevertheless, to give you an idea of what is on offer, Aqru offers up to 12% for stablecoin deposits and 7% for Bitcoin and Ethereum.
In comparison, the best interest rate on stablecoins at Coinbase is just 2%, paid on DAI tokens.
And in BlockFi you will receive a maximum of 4.5% and 5% from Bitcoin and Ethereum, respectively.
Another thing to keep in mind, Looking for the best interest rates for cryptocurrencies, is that higher returns may be the result of less favorable conditions.
For example, in order to maximize Crypto.com's interest rate, not only do you have to lock in your tokens for 90 days, but you also have to pledge the platform's native digital token, Cronos CRO.
These are issues that need to be considered before moving forward.
What cryptocurrencies can you earn interest on?
Simply put, you can earn interest on virtually any cryptocurrency - it depends on the platform in question which digital assets it supports. For this reason, most cryptocurrency accounts focus on large-cap projects such as Bitcoin, Ethereum and Cardano.
If you want to invest in less liquid cryptocurrencies that have a smaller market capitalization, then Binance is probably the best platform for this purpose.
If you're looking for the highest returns with the lowest volatility, nothing compares to stablecoins.
Aqru Offers APYs of up to 12% on stablecoins such as USDT and USDC, which are pegged to the US dollar.
Therefore, when earning money from cryptocurrency stablecoins, you don't have to worry about constantly changing token prices.
On the other hand, when choosing traditional cryptocurrencies such as Bitcoin or Ethereum, there is always a risk that the value of the token will drop. If this happens, your losses could exceed the amount of interest that your chosen cryptocurrency account provider offers.
Interest compounded on cryptocurrencies?
In traditional investment markets - whether in the form of stocks, bonds or real estate - income-generating assets allow a portfolio to grow in value much faster.
This is because of the operation of compound interest. In its most basic form, by reinvesting dividends, coupon payments or monthly rental income into other assets, newly purchased instruments will also begin to earn regular returns.
This way you will "earn interest". The good news from your perspective is that compound interest can also be earned through a cryptocurrency account.
This means that every time you receive a withdrawal - which is often daily - you reinvest those funds back into the corresponding interest-bearing account.
In this way, you can accelerate the rate at which your cryptocurrency funds grow.
- Suppose you invest $1,000 in a cryptocurrency savings account that pays 10% per year.
- At the end of the first year, you will earn $100 in interest.
- If you decide to withdraw that $100, your balance will return to $1,000, and you will again receive $100 in interest at the end of the next year - assuming the annual rate remains at 10%.
- However, if you reinvest that $100 into a cryptocurrency account, you will earn interest of $110 the following year.
- This is because the total balance of $1,100 at 10% APY yields $110.
- Then, if you reinvested the interest, your new balance would be $1,210. This means that at an interest rate of 10%, next year's interest installment would be $121.
As you can see from the example above, every time you reinvest interest from cryptocurrencies back into your savings account, your payments increase exponentially.
How to earn interest on cryptocurrencies?
We will now show you how to earn interest on cryptocurrencies on one of the best platforms, which is Aqru.
Step 1: Register an account
The first part of the process is to register an account with Aqru. This will initially require an email address, preferred currency and a password of your choice.
You must also read and accept the terms and conditions before clicking the "Create Account" button.
Step 2: Verify identity
Aqru complies with all relevant anti-money laundering regulations. Accordingly, all newly registered users must go through the KYC process.
First, it will require you to enter some information about who you are - such as your full name, nationality, home address and date of birth.
You will then need to send a copy of your government-issued ID.
Step 3: Deposit funds
Once your Aqru account is verified, you can proceed with the deposit. Interestingly, Aqru supports deposits in both local currency and cryptocurrencies.
The first supports euros and pounds. The second supports various stablecoins, Bitcoin and Ethereum. The minimum amount that can be deposited in national currency is £100/euro.
Step 4: Start earning interest on cryptocurrencies
Once you deposit the asset of your choice, you will start earning interest. You can check the corresponding interest rate for each supported currency and digital asset on your Aqru account dashboard.
Don't forget that interest will be paid daily, and you can withdraw your funds at any time.
Is interest on cryptocurrencies taxable?
You may already know that many countries tax profits from cryptocurrency trading in the same way as other assets that generate capital gains.
But what about interest on cryptocurrencies?
Well, it really depends on the country you are a resident of for tax purposes - as there is no universally accepted system.
As a result, it may be that if a jurisdiction taxes income earned from a cryptocurrency interest account, it may be taxed in the same way as dividend income.
But, again, it is necessary to seek professional advice from a qualified tax specialist.
Are platforms offering interest on cryptocurrencies safe?
This part of our guide is potentially the most important - we discuss the security implications of using cryptocurrency interest bearing accounts.
For most savings accounts, there are several basic risks to consider - including:
- Risks associated with a platform offering an account with interest in cryptocurrencies
- Risk of non-payment of loan by large number of borrowers
- The risk of a collapse of the broader cryptocurrency market.
We discuss the above risks in more detail in the sections below.
Risks associated with the platform
When you deposit funds into a cryptocurrency account, you are using a centralized provider. In short, this means that you trust that the platform in question will fulfill its obligations.
This includes keeping investments in cryptocurrencies safe and out of the hands of remote hackers. It also means paying interest on time and in the agreed amount.
There is no guarantee that a platform will meet any of the above conditions - so before opening a cryptocurrency account, check the provider in question carefully.
Risk of default
We explained earlier in great detail that cryptocurrency account providers are able to pay you interest because the tokens you deposit are used to fund loans. Of course, as with all loan agreements, there is always a risk of default.
- On the one hand, if a small number of borrowers default on their loan repayments, it probably won't be much of a problem.
- However, if a large number of loan defaults occur on one platform, this can be problematic.
- After all, in recent years we have seen the collapse of many peer-to-peer lending platforms - resulting in investors losing some or even all of their money.
As such, the best cryptocurrency accounts we've come across have an important security feature - collateral. This means that in order for someone to be able to borrow funds on the platform, they need to make a security deposit in the form of cryptocurrency.
This means that if a person defaults on a loan, the platform will sell the collateral to ensure investors are repaid.
Risk of market collapse
Referring to the above section, it is worth noting that the best cryptocurrency platforms require a minimum amount of collateral to facilitate loan applications. However, this collateral is unlikely to be sufficient in the event of a major cryptocurrency market crash.
After all, if the platform is required to sell a large amount of collateral when market prices drop significantly, this means it will receive much less back compared to the original principal at the time of the loan.
All in all, cryptocurrency accounts give you the best of both worlds. Not only can you invest in your favorite digital currencies with the hope that the value of the token will increase over time, but you can also earn regular interest on your holdings.
Compared to traditional bank accounts, cryptocurrency accounts offer much more attractive returns. In many cases, they exceed 10% per year. However, risks must be taken into account, as profits are never guaranteed.
To get started with the best cryptocurrency interest rate account for 2022, consider Aqru. The trusted platform offers APYs of 7% on both Bitcoin and Ethereum, as well as 12% on stablecoins such as USDC and USDT.
Yes, by depositing your cryptocurrencies into a cryptocurrency account, you can earn interest on your idle assets. The best places to earn cryptocurrencies offer a safe and secure platform and attractive annual interest rates .
Cryptocurrency interest rates vary widely depending on several factors. In addition to the provider offering the cryptocurrency interest account, RRSOs depend on the token in question and whether a lock-in period applies.
Some of the best interest rates for cryptocurrencies we've come across are offered by Aqru. This platform offers 7% on Bitcoin and Ethereum and 12% on stablecoins.
One of the best ways to earn interest on cryptocurrencies is to buy a solid stablecoin, such as USDC, and deposit the tokens on a platform such as Aqru. This way, you can earn 12% per year without having to worry about price fluctuations, since USDC is pegged to the US dollar.
Stable cryptocurrencies "stablecoins," such as USDC and USDT, typically offer an attractive rate of return of around 12%. For smaller capitalization coins, it is even possible to achieve returns in excess of 100% per year. However, the risk of loss is higher.
We found that overall the best cryptocurrency interest account is offered by Aqru. You can read our comprehensive review of Aqru to find out why.
The views and opinions expressed here are solely those of the author and should not be taken as financial advice either. Every investment and transactional activity involves risk, so you are advised to do your own research when making any trading, investment or financial decisions.