Welcome to this week’s info post, in which I’ll be discussing that “Banking” category on my weekly updates.
- This is a long post. If you just want to see which bank I suggest and what they offer, scroll down to “Where Did I Choose?” and read from there.
I got into crypto somewhere around 2014 with faucets, followed by my first £25 purchase of 0.04 BTC in 2016. For those of us who’ve been in crypto for a while, the idea of earning interest on your coins simply by “banking” them somewhere is bizarre. I mean, crypto was invented to give us back control of our money, to stop centralising, to sidestep The Establishment by making us our own banks.
Then crypto went mainstream and suddenly we had all the TradFi mechanics dumped into our little world, along with all the abuse and corruption that comes with it (and none of the regulation for a long time, not that it makes much real difference).
And with the mainstream came banking. That is, earning interest by leaving your funds in an exchange’s wallet (i.e. giving up control) or even locking up certain amounts of certain cryptos (and stablecoins) for specific periods to earn that interest.
Why Bank?
Normally, I’m very much against the idea of putting my crypto into someone else’s wallet unless I’m trading it, but recent experience has made me reconsider.
In the first approximately 150 days of my current attempt to earn a million through crypto, I was following the 1% Trader on BlueSky. That went quite well, with about 15% to 20% gains. Then they disappeared, I sucked at trading again and, as I looked at how things had worked out, I realised that BTC had accumulated in value by more than I’d earned (holding mostly USDT for trading). It went up by about 30% in the same period (March to September/October).
So instead of worrying myself stupid about market movements and making 1% trades, I could have sat here on my fat arse, playing video games and doing absolutely sweet F.A., and still earned more than I did with all that effort and stress. Yeesh.
Obviously it’s not always going to do that, but it made me think about holding some of my crypto as crypto, so it would accumulate in value regardless of how well (or badly) I did on the trading front.
And if I’m holding crypto as crypto, I might as well earn interest.
That’s why I went looking for banking options.
What I Want From Banking
If I’m going to put my crypto in someone else’s pocket, even temporarily, they’re probably going to force me to do KYC. In return for that ridiculous invasion of privacy and the stupendous amount of trust that crypto banking requires, I want four things:
- Worthwhile returns
- More crypto
- Easy subscription and redemption
- Reputable, secure bank (as far as possible)
Let’s look at those things in turn.
Returns
Note that I’m talking about banking. I’m avoiding DeFi. Those interest rates look great but I don’t want the risks.
Short version: offering me a couple of percent per year on my crypto is bollocks.
Even a bad trader like me can make more than that in the current markets in the long term. And I don’t trust anywhere enough to risk putting my crypto in their wallet for a measly 2% or 3% per annum.
You want my crypto, I want double-figure interest, not that high-street bank “oh, we’re so strapped for cash that we can’t possibly offer you better” nonsense. Everyone sees that the big organisations are pocketing millions (or more) in profit, so single-figure interest rates are, quite bluntly, a bad joke.
More Crypto
If I’m putting my crypto into someone else’s wallet, I expect to earn the same crypto in interest.
Any exchange or service offering USDT when I put my BTC into their setup can stick their offer where the sun doesn’t shine. Without lubrication.
I’m not talking about staking, either. I can do that myself in my own wallets, frequently with cold staking that doesn’t require handing over control.
I invest BTC, I expect more BTC in return. Otherwise I’m missing out on the constant rise in value of my crypto (assuming I’m banking big-name choices like BTC, ETH, SOL and so on) and getting stablecoins that lose value in return. Not born yesterday, not gonna happen.
Easy Access
Unless a service offers me 3x or 5x the interest for locking crypto for a specified time period, I expect to be able to invest and redeem with a single click (or two, if they want confirmation).
If they’re going to put me through a whole process that takes more than 30 seconds, they can go play with the cars on the motorway.
This is crypto, not TradFi. The old-school “we control everything so you have to do what we say” doesn’t work here. We expect easy access because we all know it’s done automatically.
Reputation
Regardless of whether I’m banking $10 or $10,000, I need to know that the place holding my crypto is not gonna disappear.
This is perhaps the only good thing that comes from regulation, though it’s still far from infallible. The big exchanges that offer banking have been forced to follow procedures that reassure their customers, that guarantee they won’t vanish with the pull of a rug, that they will still be around for a while even if things get bad.
CoinGecko’s list of exchanges, with trust scores, is invaluable here.
Where Did I Choose?
I have accounts at most of the major exchanges, though most are dormant, so I could check out what’s on offer without too much difficulty.
No, I didn’t do that…
I heard someone on a forum talking about the interest they were getting, so compared that to a few places, and ended up with the same one!
I did learn that most places do a two-tier interest setup, with double-figure interest on the first $1,000 or so, then godawful offers like 1% above that level.
That meant I needed a different approach with multiple non-KYC accounts to earn the maximum. Finding an exchange without forced KYC, with decent interest, and with a good reputation? Not easy.
I ended up at CoinEx (not a referral as it’s not available in the UK – you might need a VPN).
They have an 8/10 trust score – I would’ve preferred a 10 – but they have no forced KYC and offer excellent rates. The one thing I need to remember is to keep my eyes open for news of any troubles there. Forewarned is forearmed, as they say.
I registered, deposited, put the funds into the bank, waited a day or two, redeemed the funds, and withdrew. Everything went fine, no hassle, no problem withdrawing. Good news!
What Rates Am I Getting?
The CoinEx interest offering covers multiple coins. Currently, their top earners are:
- USDC 15.4% (minimum $10)
- USDT 15.34% (minimum $10)
- ETH 12.55% (minimum 0.003 ETH, usually around $10)
- BTC 11.05% (minimum 0.0009 BTC, usually around $90)
The next highest is SOL at around 5% – not worth it when I can stake it anywhere/myself – and my USDT is busy earning in trading (whether me or copy trading) for better returns. So I’m only interested in BTC and ETH from that list. That’s fine: I want to stick to the top cryptos anyway, as they’re the most likely to gain in value.
The exchange limits those lovely rates to the first 0.2 ETH (roughly $600 to $900 at typical prices) and 0.01 BTC (roughly $800 to $1,200), then they drop to about 1% each.
Put those amounts together and you have about $1,500-$2,000 (per account) earning over 10% per year, with interest paid in the same coin daily so it all accrues in value as prices rise. And you can start earning with ETH at that very low $10 threshold.
That’s a pretty good deal. I’m in.
For those of you with less than one account’s total (like a few dollars or a few hundred), you just deposit and subscribe (in “Earn” on the left menu).
For anyone who needs multiple accounts, managing it isn’t too complicated as long as you set a reminder to do a monthly check:
- Register with a spare email account (gmail’s always easy, but switch OFF their “smart” crap to avoid privacy issues)
- Note your deposit address(es) – keep a list for multiple accounts
- Send crypto (I suggest sending USDT and trading it, as it’s quicker and cheaper to use BEP20 for transfers)
- Subscribe to the two interest options:
- 0.00993 BTC
- 0.198 ETH
- Check in every month to stay under the limit:
- Redeem the whole amount
- Put back those amounts
- Keep the interest
Those numbers aren’t absolutely precise because I’m not that good at working out daily interest and so on. If anyone wants to give me a formula (or an amount to put in) so that the numbers are maximised, I’ll be very grateful!
You might also keep a list of withdrawal methods, ensuring you use a different chain for each account’s output (i.e. sell to USDT, move it) to avoid any confusion. And maybe a note of which VPN location you use for each, for consistency. You could even use a different browser for each (Chrome, Edge, Opera, Firefox, Waterfox, Brave, Vivaldi and so on).
Have I missed anything? Do you use crypto banking to earn extra? Would love to hear from you in the comments!
