The economic landscape of the last decade has led many people to seek a range of alternative financial tools and solutions to help them out. Among these are crypto and bitcoin savings accounts. While in the past, it may have seemed outlandish to consider cryptocurrency as a viable option when it comes to trying to save for the future, the industry, and people’s ideas about money, have changed significantly in the last few years. Let’s take a look at what the best crypto savings accounts are in 2024, and examine what somebody should be looking for when it comes to this topic.
What is a Crypto Savings Account?
A crypto savings account is somewhere that you can deposit cryptocurrency whilst also earning interest on your assets. This is very similar to a traditional savings account, where the same idea applies, only for fiat (such as USD or EUR) instead. The appeal to them is the level of interest they can offer. For people who enjoy holding their crypto for long periods, which is essentially every crypto enthusiast who does not day-trade, crypto and bitcoin savings accounts are extremely enticing. They act as a way of making passive income on digital assets being hoarded.
Related Content: Best Bitcoin Interest Rates in 2024
What Are The Top Crypto Savings Accounts?
Let’s take a look at some of the best crypto savings accounts and see what benefits they offer.
Ledn
Ledn offers both bitcoin savings accounts and USD stablecoin savings accounts. With their BTC option, you can earn up to 3% APY, and on their USDC counterpart you can earn a staggering 8.5%-10% APY– meaning that it offers some of the highest interest rates in the industry.
Ledn provides users its savings experience with both an interest-earning Growth account, and a non-interest-earning transaction account. The Growth account assets are only exposed to counterparties that generate interest for such accounts, offering full transparency as to how that interest is generated. The Transaction account, on the other hand, does not earn interest but is instead designed for day-to-day financial activities.
While Ledn places a lot of focus on BTC and USDC, compatibility with USDT and ETH is launching in due course. This gives crypto users even more options for their assets.
Many people are drawn to Ledn because there is no minimum balance for their savings accounts, and because you can withdraw up to 100 BTC or 1 million USDC at any time. Not only this, but they offer seamless trading between these two cryptocurrencies. This is fantastic for people who may want to switch their Bitcoin out for USDC during turbulent times in the crypto market.
Another major benefit that cannot be understated is that Ledn uses monthly compound interest, meaning that over time you earn money on the money you’ve already earned! There is room for exponential growth, which can skyrocket if enough funds are saved.
Pros:
- Up to 10% APY
- Monthly compound interest
- Withdraw at any time
- No minimum deposit for opening
- Seamless trading between BTC and USDC
- No insolvency risk. Ledn's new Growth Accounts are ring-fenced so that you're only exposed to the counterparties that generate your interest.
Cons:
- Limited to BTC and USDC (with USDT and ETH integration launching soon)
- Growth accounts are not available in Canada or the US
Nexo
Nexo is a crypto ecosystem that is focused largely on the lending sector. It is often revered for its range of cryptocurrencies that it supports.
Pros:
- Offers a huge selection of cryptocurrencies
- Compound interest available
- Tier-based loyalty program offers higher interest
Cons:
- To receive the best rates, you need to dedicate 10% of your portfolio to the savings account
- Lack of transparency
- Not available in Canada or the US
YouHodler
YouHodler is a collection of crypto tools and services that are focused largely on trading and storing digital assets. Among these services are its savings accounts.
Pros:
- Earn up to 15% interest on certain cryptocurrencies
- A long list of cryptocurrencies supported
- Compound interest is available
Cons:
- Not available in the US, or Switzerland
- Minimum investment requirement is $100 (or equivalent in your asset of choice)
- Can be confusing to use as its tools are all highly interconnected and overlap
Crypto.com
Crypto.com is one of the big names in this industry, offering a range of services, including savings accounts. However, this service is referred to as more of an earning model, with the company tending to veer away from the term “savings account” itself.
Pros:
- Supports 21+ cryptocurrencies
- Flexible terms available
- Works with many stablecoins
Cons:
- Flexible-term interest rates are extremely low
- Generally, interest rates are on the lower side for most cryptocurrencies, even when using longer fixed terms
- The best rates are reserved for its special private tier, meaning they can only be accessed by wealthy individuals
KuCoin
KuCoin is one of the top crypto trading platforms on the market. However, it also offers savings accounts to its user base. These are interconnected with its staking and cloud-mining solutions.
Pros:
- Supports a very wide range of altcoins
- Flexible terms available
- Compound interest available
Cons:
- Very low APR for some cryptocurrencies (such as 0.18% for BTC)
- Not available in the US
- Cluttering and cumbersome UI/interface
StormGain
StormGain is a crypto ecosystem that is centralized at its core, but which embraces DeFi features at times. It prides itself on being globally conscious and aware of its worldwide user base. In recent times, it has expanded to the crypto-saving sector, offering passive income tools.
Pros:
- 3-8% APY for certain accounts
- No mandatory locking period
- Interest is earned on a daily basis
Cons:
- Savings accounts are handled by an external partner
- This service is managed partially by Nexo (see above)
- Finding information about these accounts is hard to come by
Related content: CeFi vs DeFi - Key Differences Explained
Bake.io
Bake.io is a decentralized project that is focused on offering lending and borrowing solutions. Alongside this, it provides crypto savings accounts. However, the nature of DeFi means that these work slightly differently from the other projects and companies listed. For instance, their savings are connected to staking and yielding.
Pros:
- Highest APY is set at approximately 9.5%
- Supports various cryptocurrencies, including BTC
- Zero lockups
Cons:
- Decentralized services typically offer less customer support
- Bake uses newer technologies such as staking and yield farming to offer its service, which some might deem risky compared to how savings accounts typically work
- The terms of these accounts are subject to change at any point
CoinLoan
Coinloan is a crypto project that is focused specifically on lending and borrowing solutions. Its range of products include crypto savings accounts.
Pros:
- No lock-up on flexible accounts
- Monthly compound interest available
- Minimum period is one day
Cons:
- Requires a stake in CLT (Coinloan’s token) to access the best interest rates
- Coinloan has faced legal troubles regarding potential insolvency in the past
- $100 minimum deposit
In the past, there were several other projects and services that offered crypto savings accounts. But these companies either shut down these operations or collapsed entirely due to poor business practices and legal troubles. These include names such as BlockFi, Gemini, and Celsius.
How Does a Crypto Savings Account Work?
Crypto and Bitcoin savings accounts work by having you send your funds to a certain account and keeping them there for a period of time. After a certain point, you will start to earn interest, which will typically be sent to the same account where your savings go. Eventually, interest in-kind will accrue. The best crypto savings accounts will offer compound interest, such as Ledn. This allows your money to exponentially grow in a passive way.
This interest (also referred to as yield) is generated by having companies or projects lend out people’s deposits to counterparties who pay interest on those loans. This interest paid by other parties is then used to create the interest that people earn from within their savings accounts.
Why Use a Crypto Savings Account?
People who hold their money for long periods enjoy turning to crypto savings accounts so that they can earn additional cash without having to engage in activities like trading. That being said, even some traders enjoy using savings accounts as they might have some crypto stored away that they rarely touch, but which they still want to grow.
For people who are unable to access traditional savings accounts, or who live in a country where their legal tender is unstable, turning to a crypto savings account can be a saving grace. It allows them to nurture their funds and build wealth in a non-conventional way.
Another reason why some people turn to crypto savings accounts is because they are more comfortable with a custodial service handling their crypto assets (and providing interest on it), rather than themselves being solely responsible for holding them. Cryptocurrency is a complex and extremely high-stakes asset class to work with, in the sense that those who look after their funds in cold storage must take every measure possible to ensure they do not lose their keys or forget how to open their wallets. This might sound like a small price to pay for complete financial control, but in truth, many crypto users have lost insurmountable quantities of assets because of this. Complete self-custody is still a new concept to many people, and so it can be tough to avoid pitfalls. For those who are worried about this, it makes more sense to hand their assets over to a trusted party that can help them generate more wealth in the process.
Crypto Savings Accounts Vs. Regular Savings Accounts
The way crypto savings accounts work is largely similar to how typical traditional savings accounts do. Regardless of whether you are saving with fiat or crypto, you will still be sending your money to another party to look after, and the reasons for doing so will be to earn interest. This is great as it means that people who are used to regular savings accounts can take their knowledge and bring it over to the world of crypto saving, without embarking on a steep learning curve.
Traditional banks, who we typically associate with running regular savings accounts, also lend out deposits and offer loans. However, the major difference is that banks are often backed by governments, so their risk of failure is lower (especially in developed nations like the US and the UK) as governments have a reputation for trying to keep these organizations afloat in poor times. However, this level of perceived security often translates into lower interest rates, which can be frustrating for many.
That being said, banks are not infallible. There are numerous occasions when these corporations will fall apart and leave their user base struggling. A recent example of this is Silicon Valley Bank, which faced a spectacular fall from grace. So, while it might seem smarter to stick to traditional savings accounts because they have a longer legacy than their crypto counterparts, be aware that they, too, can crumble.
With this in mind, there is no definitive answer as to which of the two are better. In truth, the answer is highly situational, and will be different for everybody. Many people have lost faith in fiat and traditional banking (especially in the current day and age where inflation is climbing at a staggering rate), and so they might prefer working with crypto. Others might not be eligible for a traditional savings account due to the hoops that they have to jump through (such as experiencing credit checks and having to obtain legal documentation like passports or proof of a permanent home address).
That being said, people who can access both may choose to stick with traditional saving. They have a longer legacy and history in the financial world, and for people who worry about the future of crypto, a fiat savings account can feel like a safer bet overall.
Related content: Is Crypto a Good Hedge Against Inflation in 2024?
Important Factors to Consider When Comparing Crypto Savings Accounts
There are several major factors to consider when looking for the best crypto savings accounts. Let’s delve into these!
The Interest Rates on Your Crypto Deposits
Your interest rate will determine how much you can accrue over a certain amount of time. For example, if you open a USDC savings account with Ledn, then you can earn up to 9% APY.
Fees for Deposits and Withdrawals
Some crypto and Bitcoin savings accounts charge a fee for deposits and withdrawals. These can range from being so small as to be nominal, up to being relatively significant. Keep these in mind because they can eat away at your potential earnings, especially if you are considering adding or subtracting a lot from your savings account. It’s somewhat implied in the name, but savings accounts are often set up to favor those who are willing to send a lump sum of their money over and then leave it alone for a prolonged time. They are not really the best tool for people who may want to regularly dip into their savings.
Your Chosen Platforms Reputation
When you open a savings account, you are essentially handing your money over to somebody else. This means that you should be extremely careful about who you do this with, and should only proceed if you significantly trust them. Take a look at the reputation of a platform by searching to see what people’s opinions are of them, and by checking if they are upfront about their legal and regulatory documentation. Some projects, such as Ledn, even go so far as to provide radical transparency in terms of their proof of reserves.
The Crypto Saving Account Risks
Like any financial activity, there are inherent risks. The biggest of which is that, if you pick the wrong provider, they could become insolvent and be prevented from withdrawing. Or, if you are unlucky enough to choose a project that is devious or untrustworthy, they could even perform an exit scam (also referred to as a rug pull). This is where a platform suddenly shuts down and closes off all deposit or withdrawal channels, proceeding to cut off communication entirely. The best way to avoid this is to pick only the projects with the most transparency and overall positive reputation.
If you choose the right provider, then crypto savings accounts can actually be one of the safest investment models available. They are much less of a gamble than trading, and they are often structurally identical to traditional savings accounts, meaning that they do not use more novel or blockchain-specific elements, such as with staking. Ledn's recent transition to Growth Accounts represent the new standard for crypto savings accounts.
Should You Use Crypto Savings Accounts?
The answer is going to be different for everybody, but if you are someone who holds a reasonable amount of cryptocurrency, and you would prefer to make some gains from it whilst avoiding the risks of trading or self custody, then this could be the perfect option for you. This is especially true if you have a genuine belief in the future of cryptocurrency as an asset class, and envisage that it will become further integrated into our world.
Conclusion
Crypto and Bitcoin savings accounts are a fantastic way of earning interest in-kind on the assets you own and hold. They are simple to set up, and the risks are relatively small compared to other areas such as trading. If you pick the right platform, then opening one can be quick and easy, and with Ledn’s options available, you can even start earning compound interest within the first month! Take a look at the best crypto savings accounts listed and see for yourself which ones look fascinating and worthwhile to you.
Sponsored by 21 Technologies Inc. and its affiliates (“Ledn”). All reviews and opinions expressed are based on my personal views.
