Are Crypto Banks the Intersection of Traditional Finance and DeFi?

Cryptocurrency
First published
December 22, 2021
Last updated
January 25, 2022

The cryptocurrency space has grown tremendously from the ground up and the majority of hodlers believe that crypto is here to stay. Not to mention, more and more institutes are adopting cryptocurrencies. Microsoft, Amazon, J.P. Morgan, and PayPal are among the top companies that have live blockchain operations.

However, despite the increasing popularity of crypto, there is a lot of hesitance and speculation among investors since cryptocurrencies are relatively new to the fintech market. When investors see that the crypto transactions are irreversible and that the market is volatile then they get overwhelmed with the premise of crypto as a source of passive income. 

There are numerous educational resources available to help newcomers get started but it takes serious effort from the user to familiarise themselves with the ever-evolving cryptocurrency market. Having said that, crypto’s promise of a decentralized and global money system has great potential and is worth looking into. 

Decentralized Finance Vs Traditional Finance

Cryptocurrencies have a variety of use cases that are becoming more common with time. Some users want to borrow, lend, earn interest and also want other financial tools for growing their crypto. That is where DeFi shines but the difficulty curve of understanding DeFi is more than the Bitcoin wallets or centralized exchanges.

Needless to say, cryptocurrencies like Bitcoin were created to empower people, not to build a system that is complex to understand. The innovation in the crypto space for unique financial products is commendable but they are often beyond the understanding of even the tech-savvy users. Thus, there is a need for user-friendly platforms that can make it seamless for hodlers to invest in crypto and help them gain more crypto without any hassle. This is where we see the emergence of crypto banks.

What is a Crypto Bank?

Crypto banks are the digital asset institutes that bridge the gap between traditional banking and crypto. A crypto bank offers similar features to that of a traditional bank i.e., depositing assets, lending, and borrowing as well as letting users spend their money via credit or debit cards. Crypto banks a.k.a crypto lending platforms are essentially companies that let you lend your coins on their platform and allow you to earn interest on them.

If you are looking for reliable platforms where you can deposit your cryptocurrencies and grow them then look no further. Here are the top 5 crypto banks that you need to watch out for in 2022!

  1. Hodlnaut

Hodlnaut is a Singapore-based crypto interest-earning account a.k.a crypto bank where you can deposit your crypto and earn up to 12.73% APY on six supported assets namely BTC, ETH, USDT, USDC, WBTC, and DAI. Hodlnaut also has a unique feature called the Preferred Interest Payout with which the user can earn interest in the crypto of their choice from the supported asset types. Moreover, Hodlnaut has a Token Swap functionality that allows users to swap tokens right within the platform.

Hodlnaut is known for its top-notch customer service and has currently over 10,000 users with a total of USD 500 million assets under management. Moreover, Hodlnaut also has a security-first approach and has partnered with Fireblocks to secure its digital assets. The platform also provides an optional Nexus Mutual Custody Cover as an additional safeguard. So if you are looking for a reliable crypto bank that offers lucrative interest rates on crypto then Hodlnaut is a good option.

  1. Ledn

Ledn is a Canada-based robust and secure platform that allows you to maximize your BTC holdings and also provides loans against your BTC. If you are looking for a BTC loan or savings account to earn interest on your BTC then Ledn is a great option. The company offers three products; Bitcoin-backed loans, Bitcoin, and USDC savings account, and their B2X product which enables users to double their Bitcoin balance with a Bitcoin purchase and Bitcoin-backed loan. Users can earn up to 6.10% APY on Bitcoin and 9.5% APY in USDC. With the savings account of Ledn you can withdraw the funds at any time. However, you will have to pay a fee of $10 for each USDC withdrawal.

  1. Nexo

Nexo is a London-based crypto bank that offers a multitude of products. With the Nexo interest account, users can earn sizable interest rates on their fiat or crypto assets. The platform also has a Nexo card and crypto loan alongside a debit card that grants access to credit lines with which users can spend without having to sell their crypto.

Nexo aims to replace the traditional banking system by offering high-yield products for maximizing the value of digital assets. You can find a wide array of crypto-assets such as Bitcoin and Ethereum as well as fiat currencies like Pound Sterling. If you choose to earn in Nexo tokens you can earn up to 12% APY.

  1. CoinLoan

CoinLoan is a famous crypto interest-earning platform in Estonia that offers its services globally. The company aims to provide an easy-to-use platform for every user for them to make the most of their crypto assets. CoinLoan also offers fiat-on-ramp with which users can transfer their crypto holdings from an exchange to the lending service within the platform. If you wish to deposit your coins with a crypto bank that is reliable then CoinLoan can help you earn up to 12.3% interest on cryptocurrencies on asset types such as BTC, USDC, and ETH.

  1. BlockFi

BlockFi is a US-based crypto lending platform that is very popular in the crypto market. Established in 2018, BlockFi has got good traction ever since. Users can earn up to 9.5% interest on cryptocurrencies. If you have crypto that you would like to lend then BlockFi is a good platform. BlockFi also allows you to borrow against your coins so that you can take a loan on them instead of selling your coins. Earn monthly interest on your crypto instead of letting them sit idle in your wallet. Moreover, you can also trade cryptocurrencies like BTC, USDC, LTC, ETH, and GUSD. 

BlockFi has also launched a Bitcoin Rewards Visa Credit Card that allows hodlers to earn rewards in Bitcoin. With the card, you can earn a 1.5% rewards rate in Bitcoin on all card purchases without any fees. Furthermore, you also earn 3.5% back in Bitcoin within your first three months of using the card. 

Conclusion 

Crypto banks are a perfect intersection of traditional finance and DeFi. Amongst the variety of use cases of cryptocurrencies, crypto interest-earning accounts are gaining momentum in the volatile market. To make the most of their crypto assets, hodlers are looking for platforms where they can deposit their coins and earn interest along the way. The above-mentioned crypto banks are worth looking into in 2022 as you grow your crypto portfolio. 

Ready to set up a passive source of income through a crypto interest-earning account? Deposit with Hodlnaut and earn up to 12.73% APY

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