Cryptocurrency wallet provider Blockchain.com, well-known for its bitcoin and bitcoin cash block explorer and related data tools, has raised the interest rate it pays on cryptocurrency deposits for its users.
According to an announcement the firm published on Twitter, it is now paying users up to 12% in stablecoins deposits for PAX and USDT, up from 7%. Its interest rates for BTC moved from 4.5% to 6%, while its ETH rates are stable at 5%.
Blockchain.com offers users cryptocurrency wallets that support several cryptoassets, and claims to have created over 52 million wallets to date. Its current interest rates on deposits are now competing with the maximum interest rates offered by competitors, which also hit 12% for stablecoins on Celsius and Crypto.com. Nexo and BlockFi offer 10% and 8.6% respectively.
Speaking to The Block Peter Smith, CEO of Blockchain.com, revealed the firm can afford to increase interest rates for its retail users thanks to increased revenue coming from its institutional lending service. Smith revealed Blockchain is originating $500 million in new loans per month, and that since it launched customer deposits it added nearly $100 million from users.
To ensure it has a healthy book, Blockchain has a risk committee that oversees its business, and runs the a “majority collateralized book.2 It hasn’t yet seen a client default or miss a margin call. Internal documents reportedly show the firm is currently profitable on its loan book.
Per Smith, the interest rates for retail clients went up as there is “an incredible demand for inventory.” Trading firms and large investors are reportedly borrowing PAX and USDt to engage with the decentralized finance space and trade more seamlessly.
It’s worth noting most centralized exchanges now also let users earn interest on their cryptocurrency holdings, while on DeFi users can lend their funds to protocols to earn interest as well. Searching for yield, some users also invest in Proof-of-Stake (PoS) based cryptoassets to earn on their holdings.
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