Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific
provider, service or offering. It is not a recommendation to trade.
As the crypto market continues to evolve, crypto investors are looking at new ways to make their assets work harder. One option is through “crypto savings accounts” or “crypto earn” accounts.
You might be dazzled by the high rewards that these crypto savings accounts can offer but there is definitely risk involved. That’s because these aren’t traditional savings accounts and don’t offer the same level of protection and safety nets that you might be used to.
The more you learn, the better equipped you’ll be to decide if the rewards of this new breed of accounts outweigh the risks.
Crypto savings accounts in Ireland
You have a range of crypto savings accounts that are available to you in Ireland. Use our table below to compare and find one that matches your requirements.
How do crypto savings accounts work?
Crypto “earn” products – or “crypto savings accounts” – can potentially earn you a return on your crypto assets. They are similar to traditional savings accounts in that, the money you deposit into a traditional savings account can be used by your bank to loan out to third parties (with your permission, of course). And in exchange for the bank using your money, you receive a set percentage back – like interest.
This essentially happens with crypto savings accounts. The provider where you store your crypto assets will loan out your crypto to borrowers and provide you with a return in exchange. Many of the rates of return advertised by crypto savings providers are impressive, with some offering up to 15% or more. However, there are some important differences to consider in how crypto savings accounts operate, which we will cover in this guide.
As crypto advances, so too will the types of savings and rewards accounts you can choose from. Some crypto earn accounts offer limited services, while others are all-in-one platforms that work as part of a cryptocurrency exchange.
You’ll find 3 main ways to start earning rewards on your crypto investment:
- If you’re new to crypto or don’t own any yet, consider a crypto savings account like Linus that allows you to deposit and withdraw fiat currency while handling all the crypto transactions for you in the background.
- If you already own crypto, consider a crypto savings account like Hodlnaut, which pays yields on your deposited cryptocurrency.
- To buy, sell and earn rewards in one place, compare crypto exchanges like Nexo, Gemini or Crypto.com, which lets you automatically earn a yield on assets you buy or trade.
Many providers and platforms offer savings accounts limited to popular cryptocurrency such as Bitcoin, Ethereum and Litecoin.
Some accounts don’t require you to deposit crypto to start so it may not matter which coins are accepted. For example, Linus allows you to deposit in USD and converts US dollars into the stablecoin USDC. It then lends it out to borrowers, who pay set rates that then get passed on to you in the form of an APY or annual percentage yield.
Are crypto savings accounts safe?
Cryptocurrency is part of what’s called decentralised finance — or DeFi — which relies on a peer-to-peer system called the blockchain. It’s a system separate from centralised finance that is regulated by the Central Bank of Ireland. While traditional banks are covered by the Central Bank of Ireland, crypto savings accounts and wallets are not currently regulated or insured in Ireland.
Your savings (up to €100,000) in a traditional savings account are protected by the Deposit Guarantee Scheme. However, any funds held in a crypto savings account or wallet remain unprotected so you’ll have no way of recovering your assets if the platform supporting these crypto earn accounts and wallets goes bust or is hacked.
If you’re interested in opening a crypto earn account, then it’s worth taking a look to see if the crypto exchange has its own insurance. Some larger crypto platforms may partner with third-party insurers to offer some level of protection. Others might rely on a native cryptocurrency token as its store of value, which can be used to make up for lost funds under specific circumstances.
- BitGo. Among the largest institutional digital asset insurers, BitGo now secures digital assets up to a value of US$100 million.
- Ledger. Known for its popular cold storage cryptocurrency wallets, Ledger now offers its enterprise-focused Ledger Vault, which comes with a customised crime insurance program that insures assets worth up to US$150 million.
- Lloyd’s of London. A leading insurance marketplace, Lloyd’s of London now offers both institutional and personal protection of crypto assets. The service is provided through a partnership between Lloyd’s of London, BitGo and Coincover.
Carefully read any details of insurance protection to understand the assets it does and doesn’t cover. It may protect only cryptocurrency and not any fiat cash reserves held on the platform.
Private key control
Unlike traditional savings accounts that allow you control over your money, not all crypto savings accounts allow you to keep control over the keys to your crypto.
Noncustodial wallets like Coinbase leave you in control of the private keys to your cryptocurrency. You’re the sole owner of your cryptocurrency across transactions on the platform.
Custodial accounts like Nexo require you to hand over your private keys, trusting the platform to act as the custodian for your crypto and manage it on your behalf.
Then there are crypto savings accounts where you don’t ever see the private keys to your assets. Rather, you deposit fiat currency into the account such as EUR or USD, and the platform works with a licenced money transmitter that manages any crypto transactions in the background.
Before buying or investing in cryptocurrencies, it’s important to do some research first.
You can potentially reduce risk by researching well-established cryptocurrency platforms that prioritise security. Two-factor authentication is good, but cold storage — or storing your assets offline in a place that’s not as easy to hack into — is much stronger. Platforms like Nexo extend coverage by partnering with third-party insurance companies to protect your assets against breaches or employee-related theft.
Search the headlines and forums like Reddit for news on the platform you’re interested in to weed out negative coverage around known vulnerabilities.
Features of crypto savings accounts
To find a crypto earn account that best suits your investment goals, you’ll want to compare the features of those available in Ireland. Here are some of the common features to look out for in a crypto savings account:
- Big returns on your investment. The advertised yield will vary depending on the account and the crypto that you deposit.
- Crypto cashback. Some platforms that support crypto savings accounts will also offer cards that allow you to earn cashback in crypto on every purchase you make.
- Loyalty programs. Depending on the type of crypto and the amount you hold, you may unlock a range of benefits and higher yields.
- Take out loans. Some platforms will allow you to borrow against your crypto assets.
Access to your investment. Some platforms require you to lock in your crypto for a set amount of time in order to earn the maximum APY. Ensure you understand the “lock-in” periods.
- Free withdrawals. While some platforms may offer a number of free withdrawals each month, others may charge you for the privilege. Consider how easy it is for your to withdraw your initial deposit and any rewards.
- Insurance. Confirm if the platform offers its own insurance policy. If a platform doesn’t offer protection internally, it may offer third-party insurance to protect your cryptocurrencies stored in your crypto savings account.
How do fees and rates work with crypto savings accounts?
As with any traditional account, there may be fees that you should be aware of and it’s no different with crypto earn accounts. Fees to look out for include withdrawal and exchange fees, as well as annual or inactivity fees.
Check which fees apply to you before signing up with a crypto savings account.
As with rates that a crypto savings account advertises, the rates you actually get may vary because of the type of crypto you hold or even the amount you plan to deposit. You may need to deposit a certain amount of crypto into the account in order to access the advertised rate. Or you may need to keep your crypto asset in your account for a set amount of time without withdrawing any in order to access a higher rate.
Before signing up, check you’re happy with the rates that are applied and the conditions that are set by the platform.
How much can I earn with a crypto savings account?
Rewards and earnings
A top factor to weigh is the crypto earn account’s advertised APY — or the return on your investment. Unlike traditional savings accounts, the APY reflects a percentage of the cryptocurrency in your account as an asset, which can fluctuate depending on supply and demand. And you don’t always earn your reward in the same way as you do for a traditional savings account.
You typically earn a yield with crypto banking products — meaning, you get paid in the reward of the crypto you’re earning a yield on. Because these accounts earn a yield, volatility doesn’t power the return. For example, a 4% LTC account will yield 4% over the year. But if the price of LTC drops by 50%, you could end up with a lower cumulative total in EUR than your initial deposit.
Some platforms implement a split APY feature, where a percentage of returns are paid in a native cryptocurrency token. A crypto savings account may be advertised as having a 12% APY, but that high of a return requires you to receive 2% in the platform’s native coin. Or you might need to hold a specific number of the native coin before you’re eligible for the highest APY.
Reward payments too depend on the crypto earn account or platform you use. You could see your yield paid out in the same cryptocurrency you deposited, in a different cryptocurrency or government-backed fiat currency, like EUR.
Compounding and frequency of payments can also vary by account or platform. Most accounts compound daily, though a few compound monthly or weekly.
Potential savings across 3 specific products
To highlight the potential savings for each type of crypto savings account, we chose three products to illustrate potential savings over 5 years. We further chose one product for each type of savings account: traditional, high-yield and crypto savings. We calculated savings based on an initial deposit of €2,500 along with a monthly deposit of €500 over 5 years, using current advertised rates at the time of comparison:
- AIB Select Account savings account — 0.01% compounded interest
- J&T Banka (via Raisin Bank)— 0.80% compounded interest
- Nexo Earn — 10.0% compounded yield
Of the 3 savings accounts we compared, earnings differed greatly:
- AIB Select Account grew to an ending balance of €32,508.
- J&T Banka (via Raisin Bank) grew to an ending balance of €33,199.
- Nexo Earn grew to an ending balance of €42,831.
How inflation can affect your potential earnings
Inflation soared to 7.8% in May 2022, the highest in Ireland since September 1984. When inflation is higher than your yield rates, that means that the value of your savings will decrease over time in present euros.
If inflation continues to rise, your savings could continue to lose their value depending on the rate you’re offered.
- If you invest €100,000 in a traditional savings account with an APY of 0.02%, in 10 years your balance will be €100,200. Based on an annual 5.5% inflation rate, that’s equivalent to €58,660 in 2022 euros.
- If you invest €100,000 in a high-yield savings account with an APY of 0.4%, in 10 years your balance will be €104,073. Based on an annual 5.5% inflation rate, that’s equivalent to €60,927 in 2022 euros.
- If you invest the equivalent of €100,000 in USDC in a crypto savings account with an APY of 8.16%, in 10 years your balance will be €219,148. Based on an annual 5.5% inflation rate, that’s equivalent to €128,295 in 2022 euros.
- If you invest the equivalent of €100,000 in BTC in a crypto savings account with an APY of 4.19%, in 10 years your balance will be €155,297. Based on an annual 5.5% inflation rate, that’s equivalent to €90,915 in 2022 euros.
So if you put your money into a traditional savings account or high-yield savings account while taking inflation into account, in 10 years you’ll have less money than you deposited. Depositing your savings into a crypto earn account with Bitcoin also leaves you with less money than you deposited, although the potential price appreciation of Bitcoin could offset (or increase) the loss in value. Only depositing into a crypto savings account with USDC leaves you with a higher savings than you started in 2022 euros.
Pros and cons of crypto savings accounts
If you own crypto or are curious about buying it, a crypto savings account can help you earn a yield on your investment and even allow you to spend it on everyday goods and services.
- High potential returns. Crypto savings accounts advertise rates up to as high as 18% APY, which dwarfs rates for traditional savings accounts.
- Access to your crypto. Many crypto savings accounts allow you to link to a debit card or even pay utility bills from your account. This flexibility improves the functionality of your crypto that you’d otherwise need to convert back into cash before spending it.
- Repeat customer benefits. The more you use a platform or exchange’s services, the greater your benefits may be. Celsius and Nexo support graduated loyalty tiers that help you earn bonus rewards, loan discounts and free withdrawals as your total token holdings grow.
Crypto savings accounts differ from traditional savings accounts in key ways you’ll want to weigh before signing up.
- No protection. Crypto savings accounts are not regulated or eligible for investor insurance. If a crypto earn account fails or a hacker steals funds from the platform supporting it, those funds may never be recovered. Even with internal measures, cryptocurrency holdings are unlikely to be as well protected when compared with cash reserves held in a traditional bank account.
- No control over private keys. When depositing cryptocurrency into a crypto savings account you may be required to relinquish control of the asset’s private keys. It is the private keys that dictate whether a cryptocurrency can be sold or transferred. By depositing funds into a third-party platform you’re trusting that chosen platform to look after your cryptocurrency correctly.
- Withdrawal restrictions. Unfortunately, a crypto savings account is usually much more stringent than a traditional savings account. Since there’s no standardised rule, a platform is free to implement any policy that it feels works best.
Crypto savings accounts vs. traditional savings accounts
At first glance, crypto savings accounts may look similar to the traditional savings accounts you’d find at your local bank. A crypto earn account will accept and store your cryptocurrency, allowing you to earn a return on your deposits. But there are some key differences to understand:
Crypto earn accounts often promote high rewards on crypto deposits. While traditional savings accounts will pay you a set amount of interest, the rate or “yield” you earn with a crypto savings account actually depends on the live value of the coin or token. This volatility can have a huge impact on your crypto assets. If the value of your crypto assets falls, there’s a possibility that your initial crypto deposit and any returns will be wiped out.
There’s no default safety. Traditional banks are authorised and regulated by the Central Bank of Ireland and covered up to €100,000 under the Deposit Guarantee Scheme. However, crypto savings accounts, wallets and platforms are unregulated in Ireland, meaning you won’t be able to recover any assets if your account is hacked or the platform goes bust.
Crypto savings accounts have restrictions on accessing your funds. Traditional savings accounts – especially an easy access account – will allow you to access your money whenever you like but a crypto earn account may limit your access or charge a fee for withdrawing your funds before a select date.
How do I open a crypto savings account?
Each platform or exchange requires different steps to sign up.
To start, look for a Sign up or Register button on your platform’s site, and follow the steps required.
Platforms are required to comply with anti-money laundering regulations and “know your customer” policies that require government-issued ID, including photos, as well as proof of address.
After supplying the relevant documentation, your identity will need to be verified. Once verified, you should be able to open your crypto earn account through the platform’s website or app and make a deposit. Your chosen deposit will depend on the platform and which fiat currencies or cryptocurrencies it supports.
Crypto savings accounts are now offering cryptocurrency investors a way to put idle cryptocurrency assets to work. The annual returns advertised are often higher than those of traditional bank accounts. Plus, the range of cryptocurrency earn accounts is constantly expanding.
While rates may be high, crypto savings accounts aren’t as well regulated as traditional savings accounts and there’s no investor protection in the form of the Deposit Guarantee Scheme. Many accounts also have some limitations with cryptocurrency withdrawal and overall custody. But a major factor to consider is that you potentially risk losing your investments and any returns if the value of your crypto falls.
For those with substantial cryptocurrency holdings that are willing to overlook short-term market volatility, depositing a set percentage into a crypto savings account can help boost passive returns. But it could prove a risky endeavour for crypto investors that don’t have the time or the patience.
For more information on more crypto banking features check out our crypto banking homepage.
Disclaimer: Cryptocurrencies are speculative, complex and involve significant risks – they are highly
volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of
future performance. Consider your own circumstances, and obtain your own advice, before relying on this information.
You should also verify the nature of any product or service (including its legal status and relevant regulatory
requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may
have holdings in the cryptocurrencies discussed.