7% INTEREST: WOULD YOU USE A CRYPTO SAVINGS ACCOUNT?
As many Aussies know, simply leaving your savings in a bank account just doesn’t cut it anymore if you’re looking to make a return. With interest rates at all time lows (though this may change soon), you’re unlikely to make any extra cash on the money you’ve got saved.
Enter: Crypto savings accounts. With interest rates of up to 7%, they’re well in excess of what you can get with a bank. Fintechs such as Block Earner and Finder Earn allow users to transform their savings into stablecoins, which are then lent out to investors. You then collect the interest.
Sounds great, right? Well, there’s a catch. That catch comes in the form of increased risk. If the investors your money is lent to go broke or refuse to pay up, you’ve got little to no recourse.
Here’s why: These crypto savings accounts aren’t treated like banks or other authorised deposit-taking institutions (ADIs) – which means that unlike ADIs (which are guaranteed by the government up to 250,000 per account holder), if you lose the money in your crypto account, it’s gone.
Will this issue be solved by future regulation? Who knows, but if so the idea of a crypto savings account would be very appealing indeed.