As the stock market has sustained a direct hit by the CORONA-19 Virus, investors are seeking alternatives like precious metals and cryptocurrencies like BITCOIN and now cryptointerest accounts some of which are offering up to 12% interest on stable coins. One company, Crypto.com offers investors earning up to 6.5% on Bitcoin, 12% on stablecoins and 18% p.a. on its proprietary property token, CRO. The company offers daily, monthly or 90-day interest lockup agreements with the interest rate increases with a higher duration. However, it is unclear who holds deposits and who the crypto is lent to. Also, the interest is not compounded. Another company, Binance Lending allows customers the opportunity to earn interest by lending them to margin traders. The traders in turn, pay interest for borrowing your funds. Binance has one offering for 12% annual yield and a high-interest savings account up to 15% with no transaction fees. However, the platform is not licensed or authorized and it is not clear how the deposits are protected.
BlockFi is a regulated New York-based financial service provider The firm generates interest for account holders by lending out their crypto to institutional borrowers. The higher interest rates run at 8.6%. However, it does not offer instant withdrawal. The terms are worth reading. It says that the interest account is not covered by insurance against losses. The company explains that it will lend, sell, pledge assign invest and commingle or otherwise dispose of funds but will use its best efforts to prevent losses. The nature of cryptocurrency, it explains, may lead to an increased risk of fraud or cyberattack.
Jeffrey Newman represents whistleblowers nationwide including Securities & Exchange whistleblowers and can be reached at jeff@jeffnewmanlaw.com or at 617-823-3217
