Version 4 - Cryptocurrency Interest Accounts


Author: Brendon Wong

Date Updated: 2021-11-18

Date Added: 2021-11-18

Research: Intermediate Investigation - Our team researched the mechanics and risks behind crypto lending and created multiple crypto interest accounts

Summary: Crypto interest accounts pay 8%–12% a year compared to <1% with savings accounts; we estimate they are riskier than savings accounts but safer than traditional investments

Recommendation: Use crypto interest accounts, like from BlockFi, for savings/investments that you are ok exposing to a higher risk of loss compared to savings accounts

Overall Impact Score: 5/10 - Moderate (~$150,000) effect on lifetime wealth

~$150,000 estimated lifetime benefit, based on 20% of someone’s yearly savings going from minimal interest to high interest, over 40 years

Audience: 95% - Most US adults

Any U.S. resident that is over the age of 18 can utilize crypto lending accounts.

Linking a bank account makes to easier to deposit and withdraw US dollars from a crypto lending provider.

Benefits: Earn 8%–12% interest per year on US dollars Costs: No significant time or monetary costs compared to common alternatives Risks: We estimate an annual risk of partial/full loss of 0.5%–6%


Most crypto lenders pay 8%–12% on stablecoin deposits per year. Larger brands that operate in other areas of crypto, like Coinbase and Gemini, pay lower rates of interest.

By participating in stablecoin lending, you also support the emergence of alternative, decentralized institutions and the creation of interest-earning products that are more advantageous to consumers.


The time required to open and use a crypto “interest account” is similar to that of a savings or brokerage account. Crypto interest accounts do not have any costs, and earn money by taking a fraction of the interest before it is paid out to lenders.

Potentially inconvenient deposit and withdrawal limitations alongside the necessity to report interest earnings as cryptocurrency transactions rather than normal interest may be the most significant negatives relative to a savings account.


The risk of loss is higher than an FDIC-insured account at a large bank, but lower than many common investments like stocks and bonds, many of which regularly experience partial drops in value. Much of the risk of crypto lending comes from the risk of borrowers not being able to pay loans back. This is a significant risk when lending normal cryptocurrency given that lenders could lose their ability to recover money from borrowers if their collateral, cryptocurrency, falls rapidly in value. This risk is largely mitigated with stablecoin lending because stablecoins are linked to the US dollar and very unlikely to experiences crashes compared to normal cryptocurrencies. No losses, either with stablecoins or standard cryptocurrency, have emerged from any provider since crypto lending accounts emerged in 2017.

Based on the base rates and underlying risks, we estimate the annual risk of partial or full loss at any stablecoin lending provider at between 0.5% (a typical bank) and 6% (a relatively pessimistic scenario assuming 50% of crypto providers experience a loss every 8 years). We think the risk is closest to the low single digits and significantly more likely to be a partial account loss than a full account loss.

Over the past several decades, stocks have had a yearly risk of loss of ~20%, and bonds have had a yearly risk of loss of ~15%. Stocks and bonds fluctuate downwards in value, whereas crypto interest accounts do not go down in value when operating normally.

Certainty: 95% - Interest payouts have been verified and risk levels are based on several years of historical results

Our testers have opened accounts at multiple crypto lending providers and confirmed that crypto lending services pay their advertised interest rates. Multiple crypto lending providers have been successfully providing high yields for users since 2018, giving us an upper bound on expected risk levels.

Difficulty: Moderate - Hesitation around new technologies and setup logistics

Cryptocurrency lending may seem “too good to be true” to some individuals, particularly those with a limited understanding of lending and stablecoins. Users will need to open an account and move cash from their traditional bank accounts to a cryptocurrency lender.


Individual Recommendation If you have a decent ($1,000+) amount of savings outside of retirement accounts, a crypto interest account may make sense in the context of a diversified investment strategy (do not put everything in crypto interest accounts, and only invest money you can afford to lose). We recommend choosing large providers like BlockFi, Nexo, and Celsius which have many customers and a proven track record. Well-known providers like Coinbase and Gemini also work, but pay lower interest rates due to their brand power. Optionally, if you have enough invested for this to be worth it, spread your funds across multiple providers to reduce risk.
Organizational Recommendation Organizations with extra funds that are not earmarked for specific expenses or otherwise critically necessary can earn extra interest by investing their funds, including in crypto interest accounts. Even storing 10% of cash in a crypto interest account paying 10% interest is equivalent to earning ~1% interest on the entire cash balance, which is much better than most business savings accounts. Certain providers like BlockFi offer crypto interest accounts for organizations. We are familiar with several forward-thinking organizations that store funds in crypto interest accounts.
Societal Recommendation In general, cryptocurrency and decentralized finance are promising areas of societal systems change that are worthy of support. Regarding crypto interest accounts, many competing options pay low interest due to low competition, high administrative costs, and borrower defaults. We welcome options like crypto interest accounts that are competitive, have low administrative costs, and low default rates so that people can earn higher interest rates and thus have greater financial security and higher standards of living.

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You can get similar yearly returns to crypto interest accounts by putting your money in traditional investments. The upside of this approach is that it is very common, and the downside is that your account will fluctuate in value on a daily basis, whereas a crypto interest account does not fluctuate in value (unless the service is having a crisis).

Recommended Resources

How stablecoins and crypto lending works
Risk of cryptocurrency lending