Digital crypto bank Bitwala and crypto lender Celsius Network have partnered in a deal that will see bank account holders earn interest for hodling their BTC
Bitwala, which created the world’s first crypto bank account in 2018, has announced a new product that allows account holders to receive interest payouts on their Bitcoin (BTC) assets held at the bank.
According to the Berlin-based bank, the Bitcoin Interest Account offers users the chance to earn up to 4% interest on their Bitcoin (BTC) holdings.
The German bank is partnering with crypto lending firm Celsius Network to let institutional investors receive crypto loans and pay interest. It means Bitcoin Interest Account holders can now earn passive income just by hodling the cryptocurrency.
Bitwala has over 80,000 bank account holders from across Europe, who can now use the accounts to buy, hold, and earn payouts on their BTC.
Account-holders can make an investment of as little as €10 in their Bitwala Bitcoin wallet and hold BTC worth €30 in the Bitcoin Interest Account to earn weekly payouts paid out every Monday.
Although Bitwala makes the Bitcoin available to Celsius Network, which then lends it out to the ‘trusted partners,’ users can withdraw or convert their BTC into Euros instantly.
Bitwala’s new product makes it the first ‘neobank’ offering traditional fiat services to allow Bitcoin hodling for interest. Its 4% annual rate is, however, does not beat what some decentralized finance (DeFi) platforms offer.
According to defiprime.com, DeFi DApps with similar interest-earning accounts offer rates of up to 8.6% per annum.
Bitwala operates under license from SolarisBank, one of the largest banks in Germany. The company raised €4 million in investment from EarlyBird and Coparion in 2018 to set up its crypto bank. This came after the business ceased operations for a while when its then-partner bank Wavecrest shut down.
Another challenger bank, London-based Revolut has a banking license that allows it to operate in over 30 countries across Europe, the Americas and Asia-Pacific. However, it has struggled to obtain approval from regulators in Australia.
Last week also saw German online-only bank N26 raise more $100 million in its Series D funding as it looks to expand its services.
Several new crypto-friendly challenger banks are in the process of securing or applying for licenses, including Estonia-based Crypterium, Polybus Bank and the UK’s BABB.