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Cryptocurrencies heralded as the future of finance are finally catching up to the centuries-old idea of making money from money. The global low-yield environment is luring professional and amateur investors to allocate billions of dollars into high-yielding crypto banking products. The emerging digital currency market is creating an alternate universe of finance, commerce, investment, and speculation, which could profoundly transform the global economy and disrupt industries. It is starting to reshape the way people borrow and save and is remaking banking as we know it.
Crypto Banking
The rapidly growing crypto finance market is foraying into the traditional banking sector. Crypto banks are provisioning interest-bearing accounts, term deposits, credit cards, collateralized loans backed by crypto asset deposits, and other services similar to the product offerings from traditional banks, albeit delivering much higher interest rates/yields. Crypto banking platforms lure customers by offering annual percentage yields (APYs) orders of magnitude higher than yields offered by traditional bank accounts. APYs ranging from 7 to 12 percent for coins such as bitcoin and stablecoins are typical. Usually, niche coins and newer crypto projects carrying higher risks offer the highest yields. The allure to attain outsize returns in a low-yield global environment is attracting mainstream attention as well.
Why are the…
