Remember the days when high-yield savings account paid 1.5% interest? Granted, this was a few years ago, but I was super excited when I first found out about them. It was a better interest rate than a lot of CDs I had seen but with the added perk of not being locked into the savings account for years.
I had a similar experience in the crypto space, but this time the interest rates were around 7.5%. You read that right, 7.5% interest to put your money in an account similar to a savings account. As a reference, the average return for the S&P 500 is 10.7% over the last 30 years (source). However, in this situation I don’t run the risk of the stock going up and down and potentially losing my hard earned money. Welcome to the new age of banking!
Before I get started, I want to remind you that anything in crypto has some inherent risk. None of the products referenced are FDIC insured which means you could potentially lose your money. I would highly recommend that you dig into each of the products a little more to ensure you understand any of the risks involved. The biggest risks I’ve seen are two fold: (1) will the Stablecoins maintain their peg to the US Dollar? (2) Do the companies providing the products have enough capital to back up the product if anything were to happen like a system hack?
With Gemini Earn you can receive up to 7.4% APY on your cryptocurrency. They have quite a few coins available to choose from. However, the one that was the most interesting to me was the Gemini dollar (GUSD).
GUSD is Gemini’s own Stablecoin that is pegged to the US Dollar. They claim that if you exchange GUSD for the US Dollar it will always be a one-to-one exchange. This is great because Stablecoins aren’t always super great on their peg.
If you deposit GUSD in Gemini Earn you’ll earn 7.4% interest APY. This is pretty amazing if you look at Gemini Earn as an extension of your savings account since GUSD is always one-to-one on the US Dollar.
All you need to do to start earning with Gemini Earn is click the “Get started” button. You’ll have to go through the process of validating who you are since the government requires that Gemini has this information. Once you’re verified, you’ll be able to connect your bank account and buy GUSD.
As a side note, I ran into issues when I tried to add my bank account info during the buying process. Gemini would show me a message that the account was added but it never showed up as an available option when I tried to purchase GUSD. I was able to get around this by going into my Account Settings, Payment Methods, and then adding my bank account there. For whatever reason, my bank account was finally verified and available during the purchase after going through the Account Settings.
Another option that I’ve found is BlockFi. BlockFi is very similar in their product offering except they have a higher interest rate. With BlockFi, you can earn up to 8.6% APY.
BlockFi doesn’t have as many crypto options as Gemini, but it does have a couple of extra Stablecoins to choose from. With BlockFi, you can go with GUSD, USDC (backed by Coinbase), or BUSD (backed by Binance). Each of those Stablecoins will earn you 8.6% APY.
Using BlockFi is very similar to using Gemini. You’ll need to create an account, fill out your information to be verified, and then deposit funds.
Setting up the account and connecting my bank account were both straightforward with BlockFi.
For a deeper dive in both BlockFi and Gemini Earn check out this podcast: https://www.modern.finance/block-fi/ It’s with the CEO of BlockFi and the Head of Business Development from Genesis (the tool Gemini uses as the backbone of Gemini Earn).