Do you want to earn a better return on your cash than what you are currently getting from your bank? If so, you should check out crypto banks! These institutions offer annual returns of 10% to 12.6%. Compare that to what traditional banks are paying on savings accounts and CDs. Bankrate.com is currently showing savings and CD rates of .8% to 1.15%.

You can get 13X higher returns than that and the best part is that this is a low-risk plan. You can learn more about how to safely grow your money using this strategy in this blog post.

Table showing comparison returns from bank CD to crypto-bank deposit. $10.558 after 5 years with bank. $16,325 after 5 years with crypto-bank.
Here’s a comparison on the 5 year return on a $10,000 deposit at 1.25% and 10.3%. You’ll earn more in the first two months at 10.3% than you would the entire 5 years at 1.15%

What is DeFi?

DeFi, or decentralized finance, is the fastest growing segment of personal finance. DeFi services are alternatives to traditional banking, investing, and lending services. They are built on Ethereum and other blockchain platforms. DeFi protocols offer a wide range of financial instruments and services that you can use to grow your money.

To do what I’m doing – and for clarity’s sake, know that I’m not a financial advisor. I’m just a guy telling you what I’m doing. Do your own research before you put your own money on the table – you’ll be using something called “stablecoins”.

What are Stablecoins?

Stablecoins are a type of cryptocurrency that are designed to minimize the volatility of the price of the coin. They’re pegged to a stable asset such as gold or the US dollar. Stablecoins are used by traders to hedge against volatile assets such as Bitcoin and Ethereum. They are also used by banks and businesses to minimize the risk of price fluctuations. The US government has approved the use of stablecoins by banks, and many major banks are now using them.

By using this strategy, we’re owning nothing more unusual than the US dollar. We’re just using a digital version of it. The benefit is that we’re getting much higher interest rates than we would from a traditional bank.

Which Crypto-Banks are Offering This?

There are several different options available, but the three we’ll talk about today are:

  1. CoinLoan, which is based in Estonia and currently paying 10.5% on USDC coins.
  2. Vauld, operating out of India and Singapore and currently paying 12.6%
  3. Hodlnaut, also out of Singapore and offering 10.5% on stablecoins.

I’ve had an account with CoinLoan for about a year now and they’ve been paying my interest every month like clockwork. I’ll be opening an account with Vauld this month to further spread my risk.

When it comes to financial regulations, Estonia and Singapore are two of the most crypto-friendly jurisdictions in the world. Both countries have robust laws in place that provide clear guidelines for businesses operating in the crypto space.

There are a lot of firms that won’t work with American clients because US regulations are such a nuisance. Some firms, like BlockFi, will do business with residents of some states in the US but not all. These three firms don’t have those kinds of restrictions.

So How Does This Work and Why Can These Crypto-Banks Pay Such High Rates?

Many people don’t really think about how banks make money, but it’s actually pretty simple. They take our deposits and loan them out to other people at higher interest rates. Then, they share some of that interest with us. That’s how banks make money and why they’re able to pay us interest on our deposited funds. It’s a pretty straightforward system that has worked well for centuries.

Crypto-banks can offer higher returns for two reasons. The first is that they don’t have the same overhead costs as traditional banks. They don’t have to pay for branches, store fronts, or ATMs, and they can operate with a smaller staff.

The second reason is that crypto-banks can charge higher interest rates on loans. This gives them a higher return on their investment, which they can then use to offer higher returns to their depositors.

So there you have it – a simple way to earn much higher interest on your cash than what traditional banks are offering. As more people become interested in investing in cryptocurrencies, crypto-banks are likely to become more popular as a way to earn higher returns on investment. Be sure to do your own research before putting your own money at risk.

In the next article, we’ll talk about the potential risks the crypto-banks pose to depositors and how we’re protected from those risks.

What are your thoughts?

Steve Norris
Steve Norris

Looking for the comma that's missing from your retirement accounts? So was I. Together, let's fix that. We'll build cash flow through a side-business, use that money to invest and create wealth and build a legacy for our families.