What Is Crypto Banking and How Does It Work?
The management of digital money at any financial service or banking provider is referred to as crypto banking. Because anyone with an internet connection can buy, sell, and trade cryptocurrencies, it’s becoming increasingly popular. Wirex, Ally Bank, Barclays, JPMorgan, and Goldman Sachs (to mention a few) are examples of crypto banks, as they all allow for the handling of digital currencies and support cryptocurrencies.
Traditional financial institutions hold stocks and cash for investors and consumers in the same way that crypto banks do. Crypto banks, on the other hand, hold digital assets in addition to regular fiat cash.
Vast Bank, for example, offers personal and business banking services such as checking and savings accounts, as well as CDs, loans, and credit cards.
Despite being a small local bank for 35 years, it just broke into crypto banking and gained national news for being the first federally chartered U.S. bank to allow customers to purchase, trade, and hold crypto assets via their bank account.
Accounts with Cryptocurrency Interest
Set up a crypto interest account, which is essentially a digital equivalent of a savings account, to get started. Interest rates on these accounts can be as high as 10%, which is significantly more than a regular savings account. BlockFi, Gemini, Linus, Nexo, and Outlet Finance are some examples of crypto savings accounts.
Checking Accounts in Bitcoin
Cryptocurrency checking accounts are also available. Because most crypto checking accounts don’t charge monthly fees, you can keep more of your money. Institutions such as Quontic Bank and Vast Bank, for example, provide crypto checking accounts.
Customers who make eligible purchases with Quontic’s Bitcoin Rewards Checking account are rewarded with Bitcoin. When you use your Quontic debit card to make a qualifying purchase in-store or online, 1.5 percent of the entire transaction amount will be converted to Bitcoin.
Other Options for Getting Started
If you want to get started with crypto banking but don’t yet own any, you may easily open an account with a cryptocurrency-friendly bank or one of the numerous decentralized finance applications, often known as Defi apps, and then buy Bitcoin and other cryptocurrencies through their crypto marketplace. Decentralized finance apps are programs that provide financial goods over decentralized blockchain networks, eliminating the need for an intermediary such as a brokerage or bank.
Is cryptocurrency banking secure?
Because it’s such a young and volatile currency, maintaining your crypto entails certain inherent risks.
If the entity you bought it from fails, neither the Federal Deposit Insurance Corporation nor the Securities Investor Protection Corporation will safeguard your crypto. The FDIC insures bank accounts up to $250,000, whereas the SIPC insures brokerage accounts up to $500,000. (Losses from dropping stock and other asset values are not covered by SIPC.)
Cryptocurrency prices can change dramatically. “You don’t want to put anything into cryptocurrency that you can’t afford to lose,” says Ryan Cole, a licensed financial planner and the founder of the San Francisco-based investment advisory business Citrine Capital.
