Stablecoins Savings Accounts – The New Safe Haven?

stablecoinsTraditional banks no longer offer the opportunity to get high interest on savings deposits. Holding funds in a traditional bank account means losing money every year due to inflation.

Coindesk reports that central banks worldwide have been buying $1.4 billion every hour since the first lockdown in March 2020. At the end of last year, the US Federal Reserve was buying $80 billion a month of treasury funds just to keep markets going.

A stablecoin savings account is not unlike a traditional savings account. One area, in which they differ markedly is the interest accrued. Platforms like Binance offer up to 14% interest on stablecoin deposits, compared to max. 1% offered by banks.

While it’s true that high-return investments are high-risk, common sense and a degree of diversification make it possible to get good returns on a deposit in stablecoin.

We present the most reliable platforms with the best APY on stablecoin savings accounts. They all beat banks by a long shot.

Stablecoins Savings Accounts Comparison Table

Platforms APY
Binance Stablecoin Saving Accounts
Average of 14.8%
Details
BlockFi Stablecoin Saving Accounts
Up to 8.6%
Details
Youhodler
Up to 12%
Details
CoinLoan
Up to 12.3%
Details
Crypto.com Stablecoin Saving Accounts
Up to 14%
Details
CakeDeFi
Up to 8.6%
Details
Nexo
Up to 12%
Details

Now, we will look at each platform in detail so you can make the best choice.

Binance

Binance stablecoin accountsBinance has been the biggest cryptocurrency exchange in the world since 2018 where volume of trading is concerned. Founded by developer Changpeng Zhao in 2017, it was first based in China. With growing regulation of the industry, the exchange moved out of the Asian country. Along with another three cryptocurrency exchange platforms, Binance raised $32 million for a stablecoin project in 2018.

At the beginning of 2019, Binance entered into a partnership with Simplex, a payment processor based in Israel, to enable users to buy cryptocurrency with debit and credit cards.

As of 2019, daily trading volume on Binance amounted to $500 million. The exchange has 13.5 million active users. The estimated annual revenue is $650 million.

Main Activities and Services

Binance is still best known for cryptocurrency exchange. Its high liquidity, low fees, and extras have led it to amass popularity. If you pay in their native token, BNB, you get further discounts.

Stablecoin Services

Stablecoins are a great solution to an issue Binance has, namely that the main platform doesn’t support crypto-to-fiat exchange. Stablecoins make it possible to exchange USD into coins. Binance is launching more and more trading pairs with different stablecoins, making it far more lucrative to buy cryptocurrency via stablecoins compared to a traditional platform. To make this process possible, Binance lists six stablecoins pegged to the US dollar in a 1:1 ratio: True USD (TUSD), Tether (USDT), their native Binance dollar (BUSD), Paxos Standard Token (PAX), USD Coin (USDC), and StableUSD (USDS).

There is no uncertainly about the exchange rate because Binance’s stablecoins are all backed by the US dollar 1:1. The exchange charges no conversion fees. Wire transfer charges for fiat are the only cost incurred. It’s fast, cheap, traceable, and safe to transfer stablecoins from one exchange to another. To convert fiat into stablecoins, Binance recommends the following trusted and straightforward platforms: Circle.com for USDC, Paxos.com for PAX, Trusttoken.com for TUSD, and Stably.io for USDS.

To purchase cryptocurrencies using fiat via stablecoins, you can open an account on one of the above platforms, complete verification, wire US dollars to the stablecoin company from your bank account, and get your stablecoins. Then, you can deposit them into your Binance account and buy Bitcoin or another cryptocurrency. Binance’s maximum trading fees are 0.1% with very low liquidity costs.

Hacks or Legal Problems

How safe is Binance? The exchange suffered a massive security breach in the spring of 2019, in which 7,000 BTC was stolen. At the time, this amount was equivalent to $40 million. Hackers uses viruses, phishing, and other techniques to commit the breach. Binance’s secure asset fund compensated customers.

Security and Insurance

Is something like this possible today? We can’t say, but the exchange is taking every measure to maintain transaction and account integrity. They have invested in AI and big data analytics solutions to identify users, carry out facial recognition, and monitor all movements on the platform to detect suspicious activity. The secure asset fund was created back in July 2018. The exchange deposits 10% of all trading fees they charge into this fund to insure against breaches. Today, all funds are stored in secure hard wallets, accessible solely in emergencies.

BlockFi

Blockfi stablecoin accountsBlockFi was founded by Zac Prince, a consumer lending expert, and Flori Marquez in New Jersey in 2017. The company took part in seed funding, which had raised $1.6 million by 2018, with the involvement of SoFi. The initiative was directed by ConsenSys Ventures.

At present, the assets managed by the exchange exceed $15 billion. Zac Prince announced the goal to generate revenue of $500 million in 2021. In 2020, turnover was just under $100 million. The exchange has more than 250,000 active users today, up from 10,000 at the end of 2019. Based on the latest Series D, BlockFi is valued at over $3 billion. Its client base is comprised of non-crypto and crypto audiences alike.

Main Activities and Services

One of BlockFi’s main activities is as a non-traditional lender providing loans in USD backed by cryptoassets. They also offer arbitrage trading on a fragmented market. Investors can borrow crypto to bridge gaps between dispersed markets or exchanges.

BlockFi is popular with over the counter (OTC) market makers who don’t wish to trade on public exchanges as these are characterized by excessive costs. To meet demand, they must have cryptocurrencies available at all times. This is not feasible because there is price volatility involved and it’s capital intensive.

Crypto ATMs and other businesses that require a crypto inventory also use the exchange. These businesses keep most of their cryptoassets in cold storage. To support day to day operations, they require some level of liquidity, which BlockFi can offer.

Stablecoin Services

BlockFi offers up to 8.6% APY on all stablecoin deposits. You can also sell or buy crypto and borrow cash on the platform. There is neither a minimum balance requirement nor any hidden fees. Users can get a loan with crypto as collateral, meaning they don’t need to sell it for cash. Accounts are fundable in US dollars, cryptocurrencies, or stablecoins. You can begin accumulating interest as soon as you open a deposit account.

Hacks or Legal Problems

There was a short-lived hacking attempt in May 2020, where cybercriminals accessed users’ personal data for about an hour and a half. This included usernames, physical and email addresses, dates of birth, and activity history. The exchange logged the attack and assured clients that no social security numbers, funds, passwords, licenses, passports, tax ID numbers, and bank details had been exposed.

Security and Insurance

To protect customers’ assets, BlockFi has developed a state of the art compliance program in cooperation with Gemini, its primary custodian. Deloitte has conferred SOC2 compliance upon Gemini for its custodianship services. This company, which is regulated by the NYDFS, keeps the vast majority of assets in cold wallets offline. The remaining 5% are in Aon-insured hot wallets.

BlockFi has no direct access to private keys. The exchange hasn’t lost customer assets in its history. In the unlikely event that a user account is compromised, it is frozen for a week. Then, the user involved undergoes identity verification via videoconference. The exchange restores account access after changing the user’s email address and password.

Youhodler

YouHodler savingLaunched in 2017, YouHodler transitioned from a small startup to a profitable business in a few years. YouHodler has offices in Cyprus and Switzerland and holds membership in the Crypto Valley Association and the Blockchain Association of Financial Commissions, two reputable industry watchdogs. The commission’s efficient and independent dispute resolution procedures guarantee users’ interests are protected at all times. According to company CEO Ilya Volkov, YouHodler has processed $10 million in loans to over 3,000 clients.

Main Activities and Services

YouHodler focuses on crypto-backed loans with stablecoin loans (TUSD, PAX, USDT, USDC, DAI, PAXG, HUSD), fiat loans (CHF, GBP, USD, EUR) and loans in Bitcoin. It offers crypto to crypto and crypto to fiat conversions, staking, crypto rewards, and high-yield cryptocurrency savings accounts. The exchange supports a large variety of popular tokens and cryptos, including BNB, ETH, BTC, BCH, LTC, XLM, HT, REP, XRP, DASH, and more.

Stablecoin Services

This platform offers up to 12% interest per year on stablecoin deposits, which is relatively high. They will deposit your interest directly into your wallet weekly. Apart from having far better rates than conventional institutions, deposit holders benefit from flexibility with the option to make deposits and withdrawals at all times.

To get started with YouHodler, you can make a deposit in EUR. You need to log in, go to your EUR wallet, press the deposit button, and following instructions. Then, you convert your deposit to one of the stablecoins available. You’ll see the conversion rate. After that, you need to transfer your funds to your savings account to start earning interest. The first payment period will begin thereafter. You can check how much has accrued daily in the “Earned” counter. This amount will be added to your savings account at the end of each week. It’s important to keep in mind that you shouldn’t withdraw any money before the week ends unless you don’t mind losing all of the interest accrued in that week. You can make a deposit during any weekly period, but the interest on that deposit will become available the following week.

Hacks or Legal Problems

In 2019, it was reported that Youhodler had forgotten password protection for its server, exposing user transaction and credit card information for just under a month. After security researchers reported the leak, the exchange pulled the database offline. It contained computer commands and log streams based on customer interaction on the front end with a large volume of daily updating records.

Security and Insurance

Youhodler uses a combination of offline and online data storage to secure users’ funds. Like one of our previous choices, they use Ledger Vault’s technology as an advanced and universal custody option. Ledger is an industry leader in blockchain application and cryptocurrency security.

Ledger’s independently-certified, state-of-the-art security technology ensures the information technology infrastructure for exchanges to manage and monitor crypto assets effectively with a self-custody, multi-authorization management solution. YouHodler disposes of a pooled insurance fund in the amount of $150 million, which covers user assets in case of a breach. Ledger Vault is supervised by Arch UK Lloyds of London, a prestigious syndicate.

The insurance fund covers various risks, including those of collusion, employee theft, and third-party theft of master seed or private keys due to hardware security breach. Vault also limits the likelihood of human error because strict governance rules control key usage for signatures. Different managers with various roles and functions have different access levels to Ledger Vault. The exchange operates based on multi-signature principles.

The risk of a hack is very limited because the exchange stores, isolates, and encrypts all cold wallet private keys within a hardware security module. Daily operators never handle them directly.

Crypto.com

crypto.com saving accountsCrypto.com was founded in 2016 by Kris Marszalek, Bobby Bao, Gary Or, and Rafael Melo in Hong Kong. Marszalek is the CEO of the company. The experienced entrepreneur has grown two companies from the ground up to revenue of $100 million. Crypto.com has more than 10 million customers at present and approximate turnover of $10 million a year. Their most popular services are the Crypto.com App (Earn), the Crypto.com Exchange, Crypto.com Visa Card, and Crypto.com DeFi wallet.

Main Activities and Services

Crypto.com is a cryptocurrency exchange and payment platform that makes it possible to pay, buy, and sell with cryptocurrencies. The app Crypto Earn bridges the gap between fiat and crypto by covering loans, savings, and investments.

Stablecoin Services

Users can get interest on stablecoin by depositing their currency of choice into Crypto Earn. Interest begins to accrue immediately and does so daily. You can make a deposit in TAUD, TCAD, PAXG, TUSD, TGBP, and USDC unless you’re based in Singapore. Deposits in Tether are available to all users except those in the US. Following confirmation, you start earning interest. Residents and citizens of Malta, Switzerland, and Hong Kong SAR cannot join Crypto Earn. The exchange is working on giving them access to these products.

There are three holding term options where stablecoin deposits are concerned: one-month, three-month, and flexible. Multiple deposits are possible.

Hacks or Legal Problems

Never any

Security and Insurance

Crypto.com drives a deep-defense, zero trust security strategy across platforms and systems. It has integrated data privacy evaluations into all processes to protect personal data. The exchange makes large investments in staff privacy and security awareness training as a way to enhance security posture reliably and over the long term.

Thanks to a strategic partnership with Ledger, Crypto.com leverages multi-signature technology and hardware security modules. Ledger Vault is a custody solution of institutional grade.

The exchange stores all cryptoassets offline in cold storage. The value of these assets is $360 million. They are insured against third-party theft and physical destruction or damage. Crypto.com holds corporate funds in hot wallets.

Cake DeFi

Cake DeFiU-Zyn Chua and Dr. Julian Hosp founded Cake in early 2019 with the idea of bringing passive income’s advantages mainstream. Dr. Julian Hosp is CEO, a doctor of medicine, an internationally renowned blockchain expert, and a successful entrepreneur. Cake’s Lapis Service makes generating good returns on assets easy and simple. This goes for assets that are not proof of stake. At present, Cake earns its users 8-9% interest via weekly batches with 4-week locking periods. The total funding amount of the company is $2.4 million.

Main Activities and Services

Cake makes money off crypto assets by bridging the gap between the general public and decentralized finance. The platform is intuitive and generate cashflow mainly through options lending and pooled master node staking. If that sounds complicated, they do a really good job of explaining it on their website. Novices and experienced investors alike can earn interest on their cryptoassets.

Stablecoin Services

Cake can hold stablecoins in deposits and users earn interest immediately. The platform is fully transparent. They even published their tax return on YouTube! This video makes master nodes easy to understand and also explains how to get started with stablecoins.

Hacks or Legal Problems

None. 90% of users rate it excellent in terms of safety on Trustpilot.

Security and Insurance

Trades and transactions within each batch of Lapis Service are hashed individually and publicly revealed when the batch ends. This serves to strike a balance between transparency and security. This makes it possible for the public as well as batch participants to review each transaction’s specific details, including the settlement price, the premium, and the strike price.

CoinLoan

CoinLoan stablecoin accountsCoinLoan went live in 2017. It is licensed and regulated under Estonian law and available to users all over the world. The exchange conducts in-depth KYC and AML procedures to make sure international and European regulations are met. According to the founders, Estonia has one of the world’s most crypto-friendly environments. The North European country ranks 15 / 162, 18 / 190, and 10 / 180 on the Human Freedom, Ease of Doing Business, and Economic Freedom indexes respectively. The exchange’s total funding amount is $3.1 million.

Main Activities and Services

CoinLoan offers interest-earning accounts and crypto-backed loans. It lets user get a loan in fiat or in crypto with crypto as collateral. It’s possible to purchase, sell, and swap assets.

Stablecoin Services

On this platform, interest accumulates daily. There are no fees for deposits and withdrawals in stablecoin and no fees on account maintenance. The platform can provide an instant loan in stablecoins as well. There is no credit history check or paperwork involved. Only the collateral assets count. There is a one-day minimum deposit period. Customers get interest in the same stablecoin they deposit. The exchange pays interest out daily at 14:00 UTC. For deposits with compounded interest, this is credited to account on the first day of each month. CoinLoan pays interest by using deposit to fund collateralized loans, much like a traditional bank.

Hacks or Legal Problems

Never any

Security and Insurance

CoinLoan uses an insured custodian and scans for vulnerabilities regularly. There is a strict policy for access recovery in place as well as well protected infrastructure. Login is subject to two-factor authentication with security alerts, CCSS compliance, cold cryptoasset storage, and account takeover protection. There is also biometric authentication.

Nexo

Nexo saving accountsOur final choice was founded in 2017. It’s backed by leading fintech establishment Credissimo and offered the first instant crypto credit lines in the world. To date, Nexo claims to have processed $700 million for more than 200,000 users. Their estimated annual revenue is currently $23.1 million with total funding of $52 million. Nexo is backed by Michael Arrington, the founder of TechCrunch, and boasts partnerships with UCL CBT, onfido, BitGo, and Polymath.

Main Activities and Services

Nexo’s main activity is still generating interest on people’s cryptocurrency investments. It’s a great choice for people who hold stablecoins, long-term cryptocurrency investors, and those who have little experience with cryptocurrency savings accounts.

Stablecoin Services

The platform supports 6 stablecoins. Once deposited, they will start accruing interest automatically. It is credited to your account every day and you can deposit more funds or make a withdrawal at any time. They explain how to open an account and start earning interest here. No maintenance fee is charged. The only fees incurred are brokerage fees on transfers to your Nexo account from an exchange wallet.

Hacks or Legal Problems

None

Security and Insurance

BitGo holds private keys in cold storage. The qualified digital asset custodian covers losses of up to $100 million. Nexo employs two-factor authentication, 24/7 fraud protection, and 256-bit encryption. Users have the option of enabling facial recognition technology. If their mobile device is stolen or lost, this tech gives them the peace of mind knowing only they have access to their account.

Conclusion

Stablecoin deposits are not protected by federal deposit insurance on unregulated cryptocurrency exchanges. What’s more, cryptocurrency platforms are vulnerable to scams and hacks. If you plan on holding assets with a crypto exchange for a certain amount of time, it’s important to recognize the risks and choose a platform wisely.

 

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