10+ Best Crypto Savings Accounts in 2024 to Earn Interest – with Highest APYs

Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong.

Investors who want to invest in the crypto market while also generating a consistent yield on coins are increasingly looking to crypto savings accounts as a solution.

Crypto savings accounts can offer yield on crypto assets that far outstrips fiat-based bank or credit union accounts. Of course, that extra yield doesn’t come without added risk, so it’s important to understand how crypto savings accounts work.

Read on to find out more about earning yield on digital assets and discover the best crypto savings accounts available today.

The Top 10+ Crypto Savings Accounts for 2024

Here’s a brief overview of the 10+ best crypto savings accounts for earning lucrative and reliable yields.

  1. Bitcoin Minetrix: Ethereum-powered crypto platform with a 72% APY and world-first stake-to-mine model for BTC earning potential. Raised over $9.1 million within a few weeks of launch, showing strong community support.
  2. Coinbase: Offers a special USDC savings account that doesn’t involve lending, as well as a staking service. USDC APY up to 5.05%, ETH APY up to 3.25%.
  3. Kraken – A well-established crypto exchange with high staking yields for all the top cryptos. USDT APY up to 4.25%
  4. Binance: The world’s largest crypto exchange with hundreds of assets for earning yield. USDT APY up to 4.4%.
  5. Kucoin: Crypto exchange with a wide list of available assets to earn yield. Bitcoin APY up to 0.36%, USDT APY up to 4%.
  6. Paybis: A beginner-friendly crypto trading platform featuring an in-house crypto wallet.
  7. NEXO: Lending platform with minimal lockup times and third-party crypto asset guarantees. Bitcoin APY up to 5%, stablecoin APY up to 10%.
  8. Crypto.com: Crypto Exchange with high yields for well-capitalized investors. Bitcoin APY up to 2.4%, USDC APY up to 6.5%.
  9. LEDN: A conservative crypto savings account for Bitcoin and USDC. Bitcoin APY up to 1.5%, USDC APY up to 9.5%.
  10. YouHodler: Savings account with no minimum lockup periods and multiple protections for investors. Bitcoin APY up to 7%, USDT APY up to 12%.
  11. Uphold: Crypto exchange and staking platform that earns yield without lending assets. Staking APY up to 13%.
  12. Outlet Finance: Used to earn interest on fiat dollars, but generates yield by trading cryptocurrencies. USD APY up to 5%.
  13. Finblox: Crypto lending firm that uses DeFi protocols to earn yield on stablecoins. ETH APY up to 4%, USDT APY up to 5%.

Reviewing the Best Cryptocurrency Savings Accounts

Let’s take a closer look at what the best crypto savings accounts have to offer.

1. Bitcoin Minetrix – ERC20 Crypto Savings Account Provides 72% PoS APY and Stake-To-Mine Tokenomics

Bitcoin Minetrix ($BTCMTX) is one of our top picks as a crypto savings account and new Bitcoin mining solution. It offers a huge 72% APY to early stakers, though yields are coming down dramatically (at one stage, this was above 100,000%).

Yields are likely to stabilize in the double digits after presale completion, though is still very appealing to serious investors.

Bitcoin Minetrix Stake-to-Mine

Aside from the staking interest rewards, Bitcoin Minetrix is a utility-focused presale. It is involved in the multi-billion dollar BTC mining industry and brings something new to it. It is the world’s first stake-to-mine model, allowing users to earn BTC through Ethereum smart contacts. 

The concept is simple. Users stake their tokens which generate cloud mining credits. These cloud mining credits are then burned in return for Bitcoin. The more tokens that are burned, the more BTC is awarded. 

All of this is achieved through a simple user interface where stakers have oversight of key information such as  ‘Mining Credits Earned’, ‘Mining Power Bought’, and ‘Total Power Received’.

Daily, weekly, and monthly rewards are also displayed, as well as options to withdraw, burn, or stake. A mobile application is set to complement the desk version in the near future.  

This crypto platform offers three mechanisms of ROI – token appreciation, token staking, and token burning for Bitcoin. This sets this account apart from many others, which just offer APY for holding your tokens.

With Bitcoin Minetrix, users have complete control over their assets – this is not the case with many Bitcoin cloud mining solutions on the market, many of which are scams. 

The price per token is $0.013, which will rise to $0.0119 in the final stage. There is a total of 4 billion tokens, of which 2.8 billion are being made available in the presale. 

Investors should read the Whitepaper for a more well-rounded understanding of this crypto account. 

Twitter and Telegram are also useful for alerts and updates. 

Presale Started September 2023
Purchase Methods USDT, ETH, BNB
Chain Ethereum
Hard Cap $32 Million
Min Investment $10
Max Investment None

2. Coinbase – Crypto Savings Accounts for US Customers

Coinbase is one of many major crypto exchanges to offer a staking service – Coinbase Earn – that allows users to earn yield on their digital assets by using them to secure their respective blockchain networks and earn rewards.

Coinbase Earn offers 3.25% APY on staked Ethereum and up to 10% on other popular staking assets.

The number of staking assets available vary based on regions. As the company notes, all rates are “based on the estimated protocol rate” at the time, and are “subject to change.”

Coinbase Earn Crypto Savings Account

Coinbase is also directly partnered with Circle – issuer of the USDC stablecoin. As such, it also offers a loyalty program with a 5.05% yield to anyone who holds their USDC on Coinbase that is neither funded by lending nor staking, but rather by Coinbase’s own funds. This rate can also change over time, but may offer a safer alternative for stablecoin yield to investors who don’t want to risk losing funds with a lender.

Coinbase also offers an enterprise staking solution to users, called Coinbase Cloud. This allows users, developers and companies with the tools to partake in staking while keeping full custody of their customers, or their own, assets. It is built on enterprise grade staking infrastructures, takes the hassle out of managing staking software and hardware, and comes with a guaranteed 99% uptime.

Coinbase Cloud Staking Supported Chains

Coinbase has stated that it’s willing to go to court with the SEC if it gets sued for offering its staking product, meaning the offering may still be available for a while – even to US residents.

Crypto Asset APY (%)
Ethereum (ETH) 3.25%
USD Coin (USDC) 5.05%
Number of Cryptos 7

Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong.

3. Kraken – Popular Exchange With High-Interest Yields

Founded in 2011, Kraken is a well-established crypto exchange that provides staking services, allowing users to earn interest on their crypto savings. It offers a large selection of digital assets, with over 200 cryptocs available for trading. The exchange supports several fiat currencies, including USD, EUR, CAD, GBP, CHF, JPY, and AUD.

Kraken allows staking for a variety of cryptos, including Ethereum (ETH), Algorand (ALGO), Cardano (ADA), Cosmos (ATOM), and others.

Kraken offers both Bonded and Flexible staking terms for certain assets. Bonded staking involves a specific period where your assets are locked, and you cannot trade or withdraw them, whereas Flexible staking allows instant unstaking at any time.

Kraken homepage

Users must have their accounts verified to the Intermediate level or higher to participate in staking on Kraken. This process involves providing personal information and documentation for identity verification.

Staking on Kraken involves depositing funds into your Kraken account, selecting the cryptocurrency you wish to stake, and choosing the staking option (Bonded or Flexible) as applicable. You can view your staked assets and rewards under Kraken’s ‘Earn’ section.

Kraken’s platform is accessible in over 190 countries, but it does have restrictions in certain regions and for specific cryptos.

Crypto Asset APY (%)
Bitcoin (BTC) 0.15%
Ethereum (ETH) 3% – 6%
Tether (USDT) 4.25%
Number of Cryptos 19

4. Binance – Huge Range of Yield-earning Products

As the world’s largest crypto exchange, Binance offers a slew of crypto-based financial products – and a savings account is naturally one of them.

With Binance Earn, users can earn on their crypto holdings through a variety of methods – including staking and lending. Furthermore, users can reap rewards from Binance’s Launchpool by locking their assets within DeFi liquidity pools.

Binance Crypto Savings Account

Binance also provides Dual Investment products that let users lock up their crypto, and automatically either “buy low” or “sell high” if the price of the asset crosses a certain point on a user-specified date. If the price doesn’t cross a given threshold, users get to keep their assets and still earn yield in the meantime.

Binance offers 346 “Simple Earn” products from which users can earn yield in some fashion, making it one of the best crypto savings platforms in terms of asset diversity. This is a great platform for those who wish for access to an array of savings accounts across the risk spectrum, which are both principal and non-principal protected. However, its lending yield on some of the most popular coins, such as Bitcoin, is relatively low.

Crypto Asset APY (%)
Bitcoin (BTC) 0.5%
Ethereum (ETH) 4.3%
Tether (USDT) 5.0%
Number of Cryptos 346

5. KuCoin – Dual Investment Offers Up to 127% APY

KuCoin provides a wide product suite for crypto investors based outside the United States, including a trading platform that supports over 700 cryptocurrencies. It also offers KuCoin Earn, which lets users save and earn crypto yield.

KuCoin can generate passive rewards for users through blockchain staking as well as lets users earn yield by lending out other coins.

KuCoin Crypto Savings AccountUnlike other platforms, KuCoin lets users choose between different yield products to match their risk-tolerance level. For Bitcoin, users can earn a relatively low and steady 0.4% APY yield with its “savings” product, or up to 127% APY with its dual investment product. Note that rates for both products are floating, and the latter does not offer principal protection.

For Ethereum, staking proves 10 times more profitable than savings. Investors can get 4% annualized returns for staking vs. 0.26% APY returns from savings yield. Stablecoin yields are lower than other platforms, with USDT savings at 1.67% APY and USDC savings at 3.5% APY.

KuCoin is also useful for those who wish to take trading into their own hands thanks to its many advanced trading features, like margin trading and trading bots.

Crypto Asset APY (%)
Ethereum (ETH) 4.04%
Bitcoin (BTC) 0.4%
USD Coin (USDC) 3.5%
Number of Cryptos 50+

6. Paybis – A Crypto Trading Platform Supporting 150+ Assets

Paybis is a crypto trading platform that emerged in 2016 and quickly cemented itself as one of the most intuitive websites to buy and sell cryptocurrencies. The platform exclusively supports the purchase of over 150+ crypto and fiat assets using fiat methods, making it one of the most beginner-friendly sites.

Paybis Interest Account

Added to that are intensive security features that stem from the platform’s licensed nature. Not only does it have a license from the FinCEN Department of the Treasury, United States of America, but it also adheres to the regulations of the European Union.

These security features consist of standard SSL encryptions and two-factor authentication for the main website. However, users who access Paybis’s own crypto wallet will get access to additional features like three-layer storage protection and private keys.

Another big plus about Paybis is that it is accessible in over 180 countries and 48 states in the US. While it doesn’t support trading pairs, its standard trading features are fit for those who only want to buy and sell crypto assets without dealing with complex trading mechanics.

Crypto Asset APY (%)
Bitcoin (BTC) Not yet available
USD Coin (USDC) Not yet available
Number of Cryptos 150+

7. NEXO – Lockup Periods Under 24 Hours

Nexo is a high-interest crypto savings platform with minimal lockup periods of under 24 hours and quality third-party security guarantees.

Over 60 top cryptocurrencies like Bitcoin, Ethereum, USDT, USDC, Dogecoin, Polygon, and Polkadot are available for saving and earning interest. Bitcoin savings earn up to 7% interest, while USDC savings earn up to 12% interest.

Nexo Crypto Savings Account

Though interest payouts are made daily, the platform limits the number of withdrawals users are allowed to conduct to 1-5 times each month.

Nexo stayed strong in 2022 while rival firm BlockFi bit the dust. Nexo credited this to its better risk management practices. These include requiring 2:1 collateralization on loans, and refusing to extend uncollateralized loans to “high-flying crypto asset managers.”

Nexo also allows users to borrow crypto at relatively lower rates than other platforms. It offers rates starting from 0% APY as long as borrowers maintain a loan-to-value ratio under 20%.

Note that Nexo’s Earn product was paused in the United States last year due to regulatory difficulties. Acquiring top yield rates also requires holding 10% of one’s portfolio in NEXO tokens, having part of their interest paid in NEXO, and agreeing to lock up one’s assets for one month.

Crypto Asset APY (%)
Bitcoin (BTC) 7%
USD Coin (USDC) 12%
Ethereum (ETH) 8%
Number of Cryptos 60+

8. Crypto.com – Top Rates for CRO Investors

Crypto.com lets investors earn yields on 21 different crypto assets/stablecoins, with varying rates depending on your CRO lockup, lockup period, membership status, and amount invested.

Bitcoin HODLers, for instance, may only earn a 0.6% APY if they choose to lockup $5000 worth of BTC for just one month with no CRO in possession. On the other hand, that APY can increase to 3.5% if the holder’s lockup is just $3,000 for 3 months, with 50,000 or more CRO in possession.

Crypto.com Crypto Savings Account

The platform also offers a bonus 2% APY on all savings products to users with a private membership holding its Obsidian Black, Rose Gold, or Icy White cards. These rewards are distributed in CRO tokens.

Tier 1 rewards for Bitcoin and Ethereum savings max out at 1.5% and 2% APY, respectively, for standard users, while USDC rewards are capped at 6.5% APY.

Crypto Asset APY (%)
Bitcoin (BTC) 3.5%
Ethereum (ETH) 4%
USD Coin (USDC) 6.5%
Number of Cryptos 21

9. LEDN – High Quality Crypto Savings Account

LEDN is a crypto lending and savings platform that allows Bitcoin holders to earn some of the safest yields available on the market. It’s our choice for the overall best crypto savings account today.

Unlike other platforms, LEDN adjusts its yields every month to adjust to market conditions so that the platform doesn’t overextend itself. For example, the platform once offered 6% APY on Bitcoin during the 2020/2021 bull market, but today has reduced that yield to 1.5% APY.

Ledn Crypto Savings Account

USDC yields, however, have remained consistently high compared to competitors, going at 9.5% APY as of April 2023. Yield is generated through rehypothecation of user funds to a variety of crypto trading firms, of which none represent a single point of failure for the company.

LEDN also generates profit by providing loans to users without a need for credit. Instead, customers can receive a loan if they provide collateral worth twice the value of the loan in Bitcoin. Bitcoin-backed loans come at a starting interest rate of 10.9% APR annually.

If the value of one’s Bitcoin falls such that the loan-to-value ratio surpasses 80%, the loan is immediately liquidated. While holding your collateral, the company provides blockchain-based proof that it never risks lending out your assets to earn more yield.

LEDN’s diversified and flexible approach allowed it to survive the 2022 bear market that claimed a host of similar firms like Celsius and BlockFi. LEDN had some exposure to Alameda Research, but was still able to honor all redemptions and never froze withdrawals.

Crypto Asset APY (%)
Bitcoin (BTC) 1.5%
USD Coin (USDC) 9.5%
Number of Cryptos 2

10. YouHodler – 30+ Cryptos for Saving and Borrowing

YouHodler is a crypto exchange and high-interest rate crypto savings account baked into one. Over 30 top cryptos are available on the platform for both saving and borrowing, including Bitcoin, Ethereum, Tether, BNB, and more.

The platform offers some of the highest rates in the crypto savings market, including up to 7% APY on Bitcoin savings, paid out weekly.

YouHodler Crypto Savings Account

YouHodler generates yield by lending out user funds. It has a minimum deposit amount of $100. It also provides crypto loans to customers funded by depositors to its savings account, which are paid out in either fiat currencies or stablecoins.

Crypto loans on YouHodler charge varying interest rates depending on the custom conditions of the loan set by the borrower (ex. price down limit), the chosen cryptocurrency, and current market conditions.

YouHodler savings accounts include limits on how much of a users’ deposits are available for earning yield, but these limits can be increased through a variety of methods.

The platform comes with many third-party security guarantees. Blockchain security firm Elliptic executes on-chain monitoring and risk assessment, while Ledger and Arch UK Lloyds of London syndicate protect customer funds and provide crime insurance.

Crypto Asset APY (%)
Bitcoin (BTC) 7%
USD Coin (USDC) 12%
Ethereum (ETH) 7%
Number of Cryptos 30+

11. Uphold – Earning Yield Through Staking

Uphold combined crypto trading, forex trading, and crypto savings services all into one app. Over 200 cryptocurrencies are available for trading on the platform, from which 32 can be staked to earn yield.

Unlike traditional savings accounts, Uphold doesn’t generate yield through lending, but by staking users’ crypto inside their relevant blockchains to earn token rewards. While this is generally a less risky method of generating returns, the number of cryptos with which this can be done is limited. For example, there is no yield for Bitcoin or stablecoins.

Uphold Crypto Savings Account

Yields earned from staking can vary depending on the token. More stable cryptos such as Ethereum can offer a 4.25% APY yield, while more volatile ones can offer up to 13% APY. APY rates are variable, however, fluctuating with a given blockchain’s supply and demand.

Uphold does not currently offer its yield services to US residents.

Crypto Asset APY (%)
Ethereum (ETH) 4.25%
Solana (SOL) 5.5%
Cardano (ADA) 3%
Number of Cryptos 30+

12. Outlet Finance – Earn High Interest on Fiat Deposits

Outlet Finance isn’t a “crypto savings account” per se, but lets users save in USD while generating yield using cryptocurrencies at a higher rate than standard USD savings accounts – up to 5% APY.

When users deposit dollars with Outlet, those funds become available to borrowers as stablecoins. All loans provided to said borrowers are overcollateralized to ensure lenders are covered, even if borrowers fail to pay back their debt. Since that collateral is posted in the form of cryptocurrencies like Ethereum, the crypto is immediately converted into US dollars if the collateral ends up being liquidated.

Outlet Finance Crypto Savings Account

The company comes with smart contract insurance to provide coverage against the risk of smart contract failure. That’s because much of Outlet’s yield comes from lending activity within DeFi pools, from which Outlet extracts 20% of users’ yield for its own profit.

Unlike traditional savings accounts, however, the platform is not insured by the Federal Deposit Insurance Corporation (FDIC). The platform also charges a 1.95% deposit fee and a 1% withdrawal fee.

Asset APY (%)
USD 5%
Number of Cryptos 0 (Converts $ to USDC for Loans)

13. Finblox – Top Platform for Stablecoin Yield

Finblox is a high savings crypto savings account that lets users earn up to 90% APY on certain crypto assets, without any minimum balance required.

The platform offers both a “savings vault” for savers looking for stablecoin yield, and a “crypto vault” for those earning on more volatile crypto assets like BTC, ETH, SOL, AXS, AVAX. It provides 32 assets for staking in total.

Finblox Crypto Savings Account

Yield can vary wildly depending on the asset selected. Altcoins like APE and AXS offer whopping 45% and 35% APY yields respectively, while stablecoins like USDC and USDT offer rates comparable to other platforms at 5%. Bitcoin currently offers no APY, while ETH provides 4% APY.

While Finblox formerly boasted no withdrawal limits, that changed in June 2022 after contagion from the collapse of Three Arrow Capital forced the platform to impose limits and suspend interest payments on certain coins.

Crypto Asset APY (%)
Ethereum (ETH) 4%
Tether (USDT) 5%
ApeCoin (APE) 45%
Number of Cryptos 32

Best Crypto Interest Accounts Comparison

Below is a basic crypto savings account comparison based on the information provided above.

Platform Number of Cryptos APY(%)
LEDN 2 BTC = 1.5%
USDC = 9.5%
YouHodler 30+ BTC = 7%

USDC = 12%
ETH = 12%

NEXO 60+ BTC = 7%

USDC = 12%

Ethereum = 8%

UpHold 30+ ETH = 4.25%

SOL = 5.5%

ADA = 3%

KuCoin 50+ BTC = 0.4%
ETH = 4.04%
USDC = 3.5%
Coinbase 120 ETH = 3.83%
DOT = 14.2%
USDC = 2%
Crypto.com 21 BTC = 3.5%

ETH = 4%

USDC = 6.5%

Outlet Finance 0 (Converts $ to USDC for Loans) USD = 5%
Binance 346 BTC = 0.5%

ETH = 4.3%

USDT = 5%

Finblox 32 ETH = 4%
USDT = 5%APE = 45%

How Do Crypto Savings Accounts Work?

Crypto savings accounts work by using the assets provided by depositors and putting them to work toward various tasks that help generate more money over time.

Many crypto savings accounts work similarly to traditional savings accounts. By depositing money within the account, investors give the provider permission to lend out their money in search of yield (ex. LEDN, NEXO, etc). Some firms do this by lending out assets to corporate trading firms, while others directly lend to other retail customers through overcollateralized crypto loans.

These loans are usually provided at a higher interest rate than the company’s savings account promises depositors, allowing the company to profit from the difference.

Ledn Homepage

Some savings accounts, such as those from Uphold and Coinbase, produce yield for customers through blockchain-based staking. With these accounts, users’ funds are used to provide security within crypto networks that use a proof of stake consensus mechanism. Such networks reward those willing to lock up their crypto for a period of time with new coins. Applicable networks include Ethereum, Solana, Cardano, Polkadot, and others.

In many cases, staking-based savings accounts offer a much higher yield than lending-based accounts. Binance, for example – which offers both types of savings accounts for ETH – provides less than 1% APY on its lending product, but a 4.3% APY on its staking product. Staking account rates vary over time, however, depending on the activity and fees generated with the account’s associated blockchain.

Another form of saving includes dual investment accounts, which let users earn yield while also specifying price points at which to “buy low” or “sell high” on specific cryptos when they cross a certain price point. Finally, firms like Coinbase simply pay out of pocket to provide customers with 2% yield for USDC held on the platform – and don’t do anything with the depositor’s money.

Which Crypto Savings Accounts Have the Highest Interest Rates?

The cryptocurrency savings accounts with the highest interest rates for the top cryptocurrencies appear to be YouHodler and NEXO. Each provides a 7% APY yield on users’ Bitcoin and a 12% APY yield on their USDC. They also provide 7% and 8% APY yields on depositors’ ETH holdings, respectively.

These yields can vary, however, depending on platform and user-specific variables. Furthermore, certain platforms offer especially high savings rates for specific altcoins. Finblox, for instance, offers a 45% APY to ApeCoin savers, and a 35% APY to HODLers of Axie Infinity Shards. Coinbase also offers a 14.2% APY to Polkadot stakers.

Note that such altcoins are more price volatile than other coins, adding risk to saving in such currencies.

What Cryptocurrencies Can You Save & Earn Interest On?

The cryptocurrencies available for saving and earning interest can vary from platform to platform. Firms like LEDN only offer two crypto savings accounts, while Binance lets users earn yield on over 300 cryptocurrencies from various sources.

Most platforms let users earn yield on the top cryptocurrencies by market cap – that is, Bitcoin and Ethereum. Both assets usually offer single-digit APYs, but are less volatile and have shown more staying power throughout market cycles than other cryptos.

Nexo Cryptos for Saving

Most platforms will also usually offer yield in one or both of the top two stablecoins – USDT and USDC. Yield for stablecoins is often higher than that of the top two cryptos– especially during bear markets.

Since USDT and USDC are effective substitutes for dollars, stablecoin yield can be reliably subsidized by the savings platform by lending out those dollars to borrowers at an even higher interest rate. LEDN, for example, charges 12.9% APR for its Bitcoin-backed loans, allowing it to support 9.5% APY for its USDC depositors.

Most other platforms also support a wide range of popular altcoins, such as Polkadot, Solana, and Cardano. Such cryptos are often offered as part of a staking service, in which user assets are used to secure the blockchain and earn native rewards rather than for lending and trading.

Altcoin savings accounts often provide much higher APYs than those available in Bitcoin, Ethereum, or stablecoin accounts. For example, 45% ApeCoin APY on Finblox and 14.2% DOT APY on Coinbase. But such coins are generally far more volatile in price, and may not be resilient across market cycles.

Here’s a list of 20 cryptos that have savings accounts on multiple platforms.

  • Bitcoin (BTC)
  • Ethereum (ETH)
  • Tether (USDT)
  • USD Coin  (USDC)
  • Binance USD (BUSD)
  • Solana (SOL)
  • Polygon (MATIC)
  • Axie Infinity Shards (AXS)
  • Avalanche (AVAX)
  • NEAR Protocol (NEAR)
  • The Sandbox (SAND)
  • Binance Coin (BNB)
  • Polkadot (DOT)
  • XRP (XRP)
  • Cardano (ADA)
  • Cosmos (ATOM)
  • ApeCoin (APE)
  • Dogecoin (DOGE)
  • Tezos (TEZ)
  • Tron (TRON)

What is Compound Savings in Crypto?

Compound savings in crypto refers to users earning interest on their interest. In other words, The amount of crypto accrued by their savings account each year rises exponentially over time, as interest payout are repurposed for further lending and staking.

For example, suppose you deposit 1 BTC into a crypto savings account, with a 1.5% APY. For simplicity’s sake, suppose the account makes interest payouts once per year. After one year, your savings will grow by 0.015 BTC, rising to 1.015 BTC in total. The next year, you will earn 1.5% interest on your new 1.015 BTC total, leading to a second-year payout of 0.15225 BTC – slightly higher than the first year.

Compound Interest Diagram

In reality, most platforms make interest payments on a more frequent basis – sometimes daily. More frequent payouts will result in slightly more exaggerated effects from compound interest.

Is Crypto Savings Interest Taxed?

In the United States, crypto savings interest is taxed as a form of income. Tax offices will view this interest as similar to a dividend or a bonus. This includes interest derived from lending out one’s coins for yield with either a CeFi or DeFi service.

Reporting this tax is fairly easy: simply calculate the value of interest payouts based on the fair market value of the crypto at that time, and report it as either additional or miscellaneous income on a tax return.

Once an investor decides to dispose of that interest payout by either selling, spending, swapping, or gifting coins, they will again be subject to capital gains tax. That’s because digital assets are viewed like traditional assets such as stocks from a tax perspective, and are subject to capital gains and losses. In other words, if crypto appreciates in value between the time an investor acquired it and the time they dispose of it, they must pay tax on the difference.

Let’s look at an example:

Suppose an investor deposited 1 BTC into a crypto savings account for 1 year at 2% APY, with interest paid out once per year. After one year, the investor receives an interest payout of 0.02 BTC. If the price of Bitcoin at the time of the interest payment were $30,000, then they would use that as reference for your interest income and report $600 of additional income to the IRS.

Now suppose the price of Bitcoin were to climb 50% over the next three months, and they sold all of your interest income for $900 at an exchange. Given that they received the BTC at $600 and sold it at $900, the investor would need to report a $300 capital gain and pay additional taxes on this.

Are Crypto Savings & Interest Accounts Safe?

While interest bearing crypto accounts can be tempting for their high yields, even the best crypto interest accounts have associated risks. It’s important to consider these risks when deciding whether using a crypto savings account is worth it.

Firstly, savings accounts require trust in a centralized intermediary to look after your funds. That means losing out on one of crypto’s core benefits – the opportunity to own digital money – so long as coins are locked away earning yield. This opens any user to risks of hacking and theft as seen with some of history’s largest centralized cryptocurrency exchanges, including Mt. Gox in 2014 and FTX in 2022.

Outside of black swan catastrophes, however, crypto savings accounts carry additional risk as part of their normal operations. Borrowing/lending platforms in particular often move crypto across a string of platforms, all of whom must be relied upon to continue generating the yield that they promised.

This is especially true for non-stablecoin crypto accounts, which may depend on active trading and timing of the market by the savings firm to continue paying out interest. While it may be easy to pay this interest during a bull market, bear markets often leave trading firms short of profits and unable to pay depositors.

In 2022, a wave of contagion across numerous high-profile lending firms forced the likes of Celsius, Voyager, BlockFi, and Alameda Research all into bankruptcy, with depositors still unable to withdraw their principal savings or their interest.

Stablecoin cryptos may be slightly less risky, given that companies can generate yield on such deposits by lending them directly to their other customers at a slightly higher interest rate. Loans given to other customers are often overcollateralized by the borrower’s crypto, providing full protection in case the counterparty defaults.

While stablecoin savings accounts typically offer much higher yield than traditional savings accounts, note that these accounts are not FDIC insured. At a regular bank, FDIC insurance protects depositors for up to $250,000 they held with the firm.

Conclusion

For a multi-crypto savings account, we recommend LEDN as the best available right now because it offers reliable yield on BTC and USDC. Plus, LEDN adjusts APY monthly to keep yield risk as low as possible. Check out any of these ecosystems today to earn a passive income on your crypto.

If you are looking to earn interest on tokens that could undergo substantial price appreciation, we recommend Bitcoin Minetrix. A large percentage of the overall supply is aimed specifically at stake-to-mine rewards.

Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong.

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Michael Graw

Michael Graw is an experienced writer in the business and B2B tech fields. His articles can be found on Business Insider, Entrepreneur, Tom’s Guide, and TechRadar, and cover everything from corporate finance to crypto and international tech regulation. A prolific copywriter and entrepreneur, Michael has worked with a wide range of SaaS and tech companies and has his finger firmly on the pulse of B2B tech and finance.