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Interest Bearing Crypto Accounts in Demand for 2019

Interest Bearing Crypto Accounts in Demand for 2019

Cryptocurrency custodial accounts with a banking twist of interest payments are set to win the trend of 2019, with all kinds of crypto interest schemes making their way, as reported by Bitcoin.com.

With the decline of the cryptocurrency market both in terms of price and volume, previous trends such as initial coin offerings and even airdrops have seen their popularity wane. Instead, crypto users are holding on and waiting patiently for the bull market to return, as many expect it to. Meanwhile, the promise of earning passive returns on crypto holdings is beginning to sound very attractive.

Crypto custodians are taking a leaf out of the banking manual: accept crypto deposits, loan it out to businesses or make forward investments, and share the returns as interest. Some of the returns are considerably lucrative compared to traditional bank savings accounts.

Nexo, for example, last week introduced up to 6.5% annual interest on stablecoins such as Tether (USDT) and True USD (TUSD). Daily compounded interest plus the ability to withdraw any amount at any time means they appear a lot more attractive than more established competitors such as Gemini-backed BlockFi, which recently pegged down interest rates for high-level accounts, or Ledgerx that introduced interest for Bitcoin accounts but imposed restrictions on withdrawals.

Legitimate and regulated Bitcoin investments have not been easy to come by until recent years. While there are plenty of crowd investment opportunities online, such as being part of a crowdfunded casino bankroll, or investing in private businesses, none have offered the same level of customer service and presumed safety nets of regulatory compliant businesses such as Nexo or BlockFi.

Critics of custodial services have pointed out that the very concept of cryptocurrency was to place control and ownership of money in the hands of the user, and that services like these encourage users to once more place their funds in control of centralized entities.

 

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Bank of America Has Patent Pending for Crypto Storage Technology

Multinational investment and financial services bank, Bank of America has applied for a patent that covers a cryptocurrency storage system for use by custodians.

Specifically, the application describes a computing device that can manage blockchain encryption tags and handle a substantial number of daily transactions.

The US Patent & Trademark Office published details of the application on Thursday following its initial filing in April. It outlines a system of entrusting cryptocurrency accounts’ secured private keys to a custodian third party such as a bank. It appears to anticipate a future where the general public has mass adopted cryptocurrencies and require traditional banking services for their assets.

Describing its place and necessity in the future of financial services, the application reads: ”As technology advances, financial transactions involving cryptocurrency have become more common. For some enterprises, it may be desirable to securely store cryptocurrency.” The Bank of America began its development of this online cryptocurrency vault system in 2014.

Don’t Take This as a Pro-Crypto Stance

While Bank of America may have applied for dozens of blockchain patents (several including cryptocurrency solutions) and invested substantially in blockchain research, top executives at the firm have open criticized Bitcoin on multiple occasions. The chief technology officer called it a ”troubling” payment system due to what she referred to as the lack of ”transparency” that makes it more challenging to catch wrongdoers in the system.

Clients of the bank have been barred from using its credit cards to purchase cryptocurrencies. Bank of America’s latest annual report references cryptocurrencies as a threat to its business model; apparently, it sees the way to combat this is as to get ahead of the game and monetize cryptocurrency use cases via patenting innovations.

The report warns of concerns that people will turn to alternative investment methods outside of its jurisdiction, reading: ”clients may choose to conduct business with other market participants who engage in business or offer products in areas we deem speculative or risky, such as cryptocurrencies.”

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