- The cryptocurrency exchange Gemini on Tuesday launched a savings product, dubbed Earn, that lets customers move their holdings in Bitcoin, or any of the 26 cryptocurrencies Gemini supports, into accounts yielding interest as high as 7.4%.
- Gemini said it can afford to pay relatively high rates — by comparison, the average savings account in the U.S. yields 0.05% interest, according to Federal Deposit Insurance Corp. (FDIC) data — because it lends the cryptocurrency deposits to institutional borrowers through a partner, Genesis Global Capital, at a higher interest rate.
- Customers should plan to assume considerably more risk than with a traditional bank’s savings account. Deposits aren’t protected by the FDIC, and there’s no central bank, such as the Federal Reserve, to set benchmark interest rates. Rather, Gemini and other providers adjust rates based on their own supply-and-demand analysis.
Earn marks a continuing expansion of Gemini’s products in banking-adjacent spaces. Gemini bought fintech startup Blockrize last month to help build its own credit card offering rewards of up to 3% in cryptocurrencies. JPMorgan Chase extended banking services to the crypto exchange last spring.
Gemini touts Earn as the first account of its kind available in all 50 states. Crypto lender BlockFi offers an account with up to 8.6% annual percentage yield (APY) on deposits, but it is not available in New York. Gemini, by contrast, is regulated by New York’s Department of Financial Services. Earn will not, however, be available to clients outside the U.S.
The Earn offering opened