In recent years, many investors have entered the Cryptocurrency industry with the hope of achieving financial freedom and the desire to move away from traditional Fiat currencies and banking. Recent indicators are starting to show instability in these areas, which is a real cause of concern for many investors.
An increase in inflation combined with banks offering plummeting interest rates has changed investor behaviour, with many starting to seek better returns and stability on their Fiat and Cryptocurrency assets through alternative platforms. Now, a new generation of high-yield Cryptocurrency savings accounts has emerged, triggering a much-needed change in how investors are choosing to earn yields on their assets.
What is a Crypto Savings Account?
A Crypto savings account allows investors to secure their assets on a platform and earn higher yields than on traditional banks by offering reward rates ranging from between 5-20% on Cryptocurrencies and Stablecoins. The most popular Crypto savings accounts include BlockFi, Celsius, YouHodler, Nexo and Drixx which we will discuss separately later on, as it has some special advantages over the others.
Most of the above provide market-leading yield returns on Cryptocurrencies along with modern financial services like collateral-secured loans and OTC trading.
Yield returns vary depending on the type of cryptocurrency you hold on the platform, with the most popular platforms accommodating some of the major coins like Bitcoin, Ethereum and Chainlink alongside some altcoins and Stablecoins. Some providers even allow you to earn rewards in their native token. For example, Celsius allows investors to earn CEL, their native Celsius token, at a rate of 1-2% higher when compared to rates offered on their secured asset.
Cryptocurrency savings accounts exist to help the new wave of modern investors earn greater returns on their assets whilst holding them on a secure platform. While this sounds like a winning strategy, there are many pros and cons to consider before signing up for a Crypto savings account.
The most obvious benefit is earning higher yields on your assets by simply holding them on a platform that handles everything for you. Most have no minimum deposit limits on all assets and offer a far greater incentive over holding assets on an exchange or hardware wallet. The earned interest is provided on either a weekly/monthly basis, with some platforms also offering compounding interest on yields.
It also offers the opportunity to earn far greater yields and returns on assets over traditional banking instruments, something that hasn’t been possible for many years. There aren’t many platforms available in the current market where you can earn 5% yields and above on your savings, and to turn down these yields on your assets seems almost counter-productive to almost any investment strategy.
Storing Stablecoins offers even more upside, as holding Stablecoins such as USDT and USDC can generate yields from 8-12% on these platforms, which eclipses the rates offered on other Cryptocurrencies and provides a relatively risk-free alternative to holding Fiat currencies in traditional banks.
Some Crypto savings accounts like Celsius and BlockFi even offer 25-50% LTV (Loan-to-value), 0.5% interest loans secured against your assets and offer incentives when paying back interest on the native platform token.
Crypto savings accounts also offer minimal resistance when opening an account. The sign-up process only requires standard identification and KYC (Know Your Customer) procedures to get started. Upon account verification, you can immediately transfer your coins into your account, which is a Cryptocurrency wallet, and start earning yields on assets straight away.
For many would-be investors, the most daunting barrier to entry is the initial purchase and transfer of Cryptocurrencies to these platforms. Now, some platforms offer a Fiat gateway, meaning you can buy Cryptocurrencies directly from the platform and send them straight to your account, further streamlining the process. Most Crypto savings accounts also offer generous referral programmes and promotional schemes that reward those who deposit assets on the platform, with incentives and bonuses when first depositing.
As ever, all Cryptocurrency accounts come with an enhanced risk profile. However, if you wish to generate maximum yields and returns, a Crypto savings account provides one of the best opportunities in years to earn more on your Cryptocurrency assets
Now, on to the cons…
As previously mentioned, the cryptocurrency market can be incredibly volatile and unpredictable. As you’re storing and holding Cryptocurrencies, you’re subject to regulations that may not exist with traditional banking systems. Whilst Crypto savings accounts are heavily regulated and guarantee the safety of your secured assets, the industry is still in its relative infancy, and is vulnerable to sudden regulations changes and government oversight.
Cryptocurrency savings accounts can also offer reduced access to your assets, with some platforms limiting withdrawals of your assets for set-time periods after deposit or on a weekly/monthly basis. This can be especially risky if you need instant access to the funds in an emergency. Also, as your assets are secured on a third-party platform, you give up the custody of your assets and keys to the platform, meaning you’re never fully in control of your assets when held on these platforms.
For example, BlockFi lends secured assets to “trusted institutional and corporate borrowers”, which means that your assets are being used to generate revenue and profits. This means that a change in company policy or technical problems can potentially restrict access to your assets at any time.
Many platforms aren’t insured to government standards and lack the regulations of traditional banks, meaning that if the platform ceases operations or gets hacked, there’s no guarantee you will get your assets back. However, it’s worth remembering that this has yet to happen on any platform, and most are insured via private insurers. This is unlikely to happen as security and regulation are always paramount with these platforms. However, it’s important to be aware that this could happen.
One final consideration is whether the platform has any requirements to reach certain yield thresholds. Some platforms may promote a higher yield amount that requires you to hold a certain amount of the native token to achieve, which may put off investors that wish to mitigate risks and only hold their desired asset on a platform.
The final word
There are now many cryptocurrency savings accounts to choose from, all offering platforms that can help you generate maximum returns on your assets. This will only grow as the sentiment towards Cryptocurrencies becomes more positive and the industry transitions into a more mainstream, regulated audience.
As always, with all Cryptocurrency ecosystem, there are many pros and cons to consider, making it imperative to research each platform carefully before the right one for you. However, despite the potential risks that naturally come with the industry, the potential upside of earning 5-20% return on your Cryptocurrencies is almost too good to ignore.
One of the better options to consider for generating yields on your Cryptocurrency assets is Drixx Yield, an integrated Crypto finance provider that helps you earn higher yields on your assets. Drixx offers market-leading average APYs on stablecoins of up to 18.6% through its intuitive, user-friendly interface and as standard, all Drixx customers receive the highest possible APY% for their chosen strategies, with no hidden tiers or token allocation required.
Military-grade security and highly regulated risk policies are used to ensure the safest, most reliable platform on the market. Interest is also paid out daily instead of weekly or monthly and funds can be added or withdrawn at any time without losing accrued interest. Investors can also take full advantage of Drixx’s “Set & Forget” feature, which automatically reinvests and compounds yields for you.
Setting up an account on Drixx is simple:
- Open a free account
- Transfer funds in one of the supported coins (USDT/USDC)
- Start earning best-in-class yields of up to 18.6% on your assets.
Now’s the perfect time to start using a Crypto savings account — Start generating the best yields with Drixx Yield today.