5 Crypto Savings Accounts in 2020 • [List] • Benzinga

With little regulation and daily price fluctuations, investing in cryptocurrency can be a major risk. But what if taking that risk could allow you to earn interest on the money you put into the cryptocurrency market?

A cryptocurrency savings account gives you access to the cryptocurrency market while allowing you to earn interest like a traditional bank savings account does. If you’re interested in long-term cryptocurrency investing, a crypto savings account can help you accrue interest while keeping your coins safe. Use our crash course on cryptocurrency savings accounts and account providers to get started and open your account. 

How Crypto Savings Accounts Work

A cryptocurrency savings account works in a similar fashion to traditional savings accounts. When you deposit money into a traditional savings account, you give the bank permission to loan out the money in your account to 3rd parties. In exchange, the bank provides you with a set percentage of interest each year.

When you open a cryptocurrency savings account, you invest your funds into a digital currency like Bitcoin or Ethereum. The savings account provider will then loan out your cryptocurrency to borrowers, providing you with a percentage of interest in exchange.

There are a few very important differences between traditional savings accounts and cryptocurrency savings accounts:

  • FDIC insurance: Major banks have insurance from the Federal Deposit Insurance Corporation (FDIC). This insurance guarantees that, even if your bank loans out the money you deposit into your account, your funds are protected. You won’t lose money when you put it into a traditional savings account because the FDIC backs your account.

Cryptocurrency savings accounts do not have FDIC insurance. As the cryptocurrency market is known for its volatility, there is a chance that your investment will decrease in value and you will lose money. For this reason, you should think of cryptocurrency savings accounts as investment accounts instead of an alternative to savings accounts.

  • Fund access: In a traditional savings account, you’re free to withdraw your money at any time with no fees or restrictions. Cryptocurrency savings accounts may limit access to your coins for a set period of time after you deposit them into your account. They may also charge you a fee for withdrawing your funds before a select date.
  • Yield: The average traditional savings account has an annual interest rate of 0.1% to 0.6% annual percentage yield (APY). Cryptocurrency savings accounts have much higher APYs. For example, when you open a cryptocurrency savings account through BlockFi, you can earn up to 8.6% APY on your initial investment. 

How to Get Started with a Crypto Savings Account

Getting started with a cryptocurrency savings account begins with comparing account providers. Here are some of the factors you might want to consider when you select an account provider:

  • Safety: Be sure to research safety first when you compare cryptocurrency savings account providers. Because these accounts don’t have FDIC insurance, consider both the financial stability of the company and its cold storage solutions to keep your investment safer.
  • Supported coins: Cryptocurrency savings accounts support a select number of cryptocurrencies — no account provider will allow you to earn interest on every single coin on the market. If you already own cryptocurrency, be sure that you choose a provider that supports the coins you’re interested in.
  • Purchase availability: If you don’t already own cryptocurrency, you might want to choose an account provider that offers a savings account and market access. For example, Coinbase allows you to quickly purchase cryptocurrencies using a number of purchase methods, and it also providers savings account access. 

Best Crypto Savings Accounts

Now that you understand the basics of how cryptocurrency savings accounts work and how they vary from traditional savings accounts, let’s take a look at a few of our favorite account providers. 

1. Best for Reliable High Yields: BlockFi

If you’re searching for the highest possible yields on your cryptocurrency savings account, be sure to consider BlockFi. BlockFi offers interest rates of up to 8.6% on your investment, which is among the highest returns we’ve seen. BlockFi also boasts an impressive security repertoire, with cold storage custodian services from Gemini and backing from names like Valar Ventures and Morgan Creek Capital Management.

In addition to high APYs on savings accounts and high-quality security features, BlockFi also offers access to crypto loans with interest rates as low as 4.5% per year. With quality security and some of the best yields on the market, BlockFi is a reliable choice for crypto savings accounts.