As more institutions and companies key into the idea of bitcoin (BTC), which Tesla’s big move being the most recent, it would seem that a lot more companies in the game are now encouraged to place their hopes on the leading currency. Just in, Gemini, the Winklevoss brothers bitcoin exchange, has just announced the launch of a new product, “Earn” to be integrated on the exchange platform. As the name implies, the product would allow existing clients who have holdings in bitcoin and other cryptocurrencies to be able to move them into accounts on the platform that would yield interest. Users would not be required of a minimum balance to enjoy the feature and transfers and withdrawals can be initiated at no extra cost.
The motive behind this development is to enable the cryptocurrency holders to save their crypto holdings and earn interest just like a normal bank savings account would operate. Interest rates promised to customers are up to 7.4% APY (annual percentage yield). This rate has been valued as more than 100 times the average interest rate on a savings account in the United States which is about 0.05%.
Confirming on how they would be able to offer such rates to their users, the company stated that this would be made possible through income generated from lending out its crypto reserves to institutional borrowers through Genesis Global Capital, its lending partner. This is especially interesting due to the declining interest rate in the US. This development shows the enthusiasm of crypto companies to move into more spheres of traditional finance and make their services more attractive.
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According to Noah Perlman, Gemini’s COO in an interview with CNBC, “We still think that crypto empowers individuals in a way that traditional banks don’t. [..] But, at the same time, there is a reason why Wall Street and traditional banking has been around as long as it has. It provides lots of safeguards, and we think that we can get the best of both worlds and offer that to our customers.”
Going further Perlman notes:
“This product is available for all 26 cryptos that Gemini supports, [..] And it’s the only cryptocurrency exchange that offers the opportunity for users to earn crypto in every state in the U.S., including New York.”
The company also assured users of the security of the platform stating that it was parallel to those of top financial institutions around the country.
Considering the well-known volatility of bitcoin and other cryptocurrencies, with bitcoin and other altcoins constantly hitting all-time highs and falling back to embarrassing dips, Perlman says, “Each customer has to assess their own risk tolerance. As a general matter, cryptocurrency — like tech stocks — can be volatile and subject to price swings.”
However, this feature is only to be made available for U.S clients and will not cut across to international users. There are also talks of possible interest earning on the Gemini dollar in the nearest future.
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