Our team researched the mechanics and risks behind crypto lending and created multiple crypto interest accounts to back up our recommendation.
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
Things to know:
We have considered different key factors (ease of use, including transferring money in/out, returns (the higher the interest the better), and risk (of loss from loan risk, hacking, etc.) in deciding which provider is the best
We focused on large providers which have many customers and a proven track record
The Best Overall: BlockFi
Ease of use: BlockFi is considered by many as a beginner friendly platform. Both the mobile apps and website are easy to use. Aside from crypto related information, they also give practical advice on choosing a car, and understanding loan terms. It is also nice that client’s can apply for loans using the mobile app.
Ease of transferring money in and out: Based on their website and user reports, there are no restrictions or lock up periods at BlockFi. Users can withdraw their funds at any time. Currently, they offer one free crypto withdrawal per month for the following cryptocurrencies (BTC, LTC, Stablecoins, DAI, PAX, USDT).
Returns: BlockFi offers returns up to 9.25% a year on stablecoins based on their recent updates. For a complete list of rates, check here.
Risk of loss: BlockFi’s security is supported by the Gemini Trust Company. Their main business is to store crypto assets safely for their clients. As such, assets are stored in cold storage (offline) and are insured by AON.
“Since inception, BlockFi has not lost any customer funds. In the event that a user’s account is compromised, which our security protocols have caught in the past, we freeze the individual’s account for one week. Then, we conduct a Videoconference with the affected individual to verify their identity. We can then change their email address and password, so they can regain control of their account.” excerpt of response from BlockFi team by Coin central.
Number of customers: According to BlockFi’s website, they have over 1M+ verified clients and 350 global institutions to manage over $10b in assets.
Proven track record: BlockFi was founded in August 2017 and has since become so popular. One of the main reasons is because they are using innovative technologies that help the average consumer potentially make more money off of their cryptocurrency.
The funds at BlockFi are held by the Gemini Trust company, which in turn is regulated by the New York Department of Financial Services. BlockFi noted that in the worst-case scenario, they would take a loss before client funds would be impacted.
RunnerUp: Celsius
Ease of use: The application process is simple but users noted a slight delay following the creation of the account because of identity verification purposes. After that, the overall user experience is great and the program is intuitive in itself. A video tutorial for each function is also available in case one needs more information.
Ease of transferring money in and out: “Celsius users are allowed to withdraw their funds at any time without fees. However, it has a soft cap on withdrawals of $50,000+ within 24 hours, and larger withdrawals can take up to 48 hours to process.” from Jemimah Jones of Coin central.
Returns: Celsius offers up to 8.5% a year on stable coins. You may check out the updated list or returns here.
Risk of loss: Celsius Network has licenses with FinCEN and the American SEC. They also employed several measures to protect user assets. It includes everything from two-factor authentication to biometric signatures. Moreover, funds get stored with third-party custodians like PrimeTrust and Fireblocks. They both provide insurance on customer assets. Celsius also has a dedicated in-house security team composed of ex-military cybersecurity professionals.
In April 2021, Celsius’ email distribution servers were hacked, and the contact info of some performed an email and SMS phishing attack that resulted in the loss of some users’ funds.
Number of customers: On 31 August 2021, Celsius announced that it has surpassed 1 million users on its platform, reaching a major milestone in its journey to bring 100 million people into crypto.
Proven track record: Celsius is a London-based cryptocurrency lending platform founded in 2017 by Alex Mashinsky, Nuke Goldstein, and S. Daniel Leon. They have paid $1b+ in digital assets — the most yield paid out to users by any crypto platform, holds $20B+ in community assets and have over $200M crypto rewards distributed.
Also great: Nexo
Ease of use: Nexo is also considered beginner friendly and easily accessible via web, iOS and android apps.
Ease of transferring money in and out: At any time, your money at Nexo can be deposited or withdrawn. Nexo customers can make 1–5 free withdrawals depending on their loyalty tier or the quantity of NEXO they have, and interest is compounded daily. Users of Nexo have access to an infinite number of free fiat deposits, transfers, and withdrawals.
Returns: At Nexo, you may earn up to 12% a year on USD Coin, can be paid out daily.
Risk of loss: Nexo keeps user assets safe in cold wallets secured with multi-signatures, with private keys stored offline in Class III bank vaults for physical protection. This substantial protection is possible through several custodians (BitGo, Ledger Vault, and Fireblocks) Again, Nexo’s user assets are insured by its custodians. This insurance comes up to around $375 million, which is only about 3% of Nexo’s total AUM. As of November 2021, Nexo has never been hacked.
Number of customers: Based on Nexo’s official website, they have over 3m users as of 2021.
Proven track record: Nexo is headquartered in London, England, and was founded in 2017 by Antoni Trenchev, Georgi Shulev, and Kosta Kantchev. Since then, they have processed $50+ billion for 3,000,000+ users across more than 200 jurisdictions.
Final thoughts
We specifically like BlockFi due to their status as a crypto lending market leader, ease of use and deposits/withdrawals, and high interest rates compared to well-known companies that are newer to the crypto lending space like Coinbase and Gemini. It could also be a good idea to spread deposits out across multiple crypto lending platforms for diversification.
Additional sources:
Investopedia — comparison between BlockFi and Coinbase
BlockFi — withdrawals
Cryptotesters — review on BlockFi
Coin central — review on BlockFi
Millennial Money Woman — BlockFi overall views
Bitcompare — review on Celsius Network
Coin central — comparison between Celsius and Nexo
Golden — Nexo review