Gemini, the crypto exchange and custodian, enables its customers to earn up to 7.4% annual percentage return (APY) on their holdings through a partnership with crypto lender Genesis.
“We have a lot of clients dealing with the traditional finance interest rate, which is quite anemic,” said Noah Perlman, Gemini’s chief operating officer. The company hopes to give customers a reason to keep their crypto on the Gemini platform. The product is in line with other traditional-looking crypto products like the Gemini credit card launched earlier this year.
The APY is in line with what is normally seen with centralized crypto lenders, but pales in comparison to the Agriculture Interest Rates in Decentralized Finance (DeFi) which are much higher but more unpredictable. (Genesis is a wholly-owned subsidiary of the Digital Currency Group, which also includes CoinDesk.)
The product is offered in all 50 states including New York, where Gemini holds its trust license. Users can earn a return on any cryptocurrency now available on the Gemini platform and on Gemini’s GUSD stablecoin at a later date. The product is currently open to active Gemini customers and will be rolled out to all Gemini customers later this month.
Gemini collects part of the spread between the interest paid on the crypto and the Genesis interest fees on its loans to institutions. As part of the partnership, Gemini reviewed Genesis’ financial statements and made sure the lender’s loans are over-collateralized, said Yusuf Hussain, Gemini’s chief risk officer.
This is the third partnership of its kind for Genesis. It also operates interest-bearing accounts with crypto lender Ledn and crypto exchange Luno, which is also owned by the Digital Currency Group.
“As for the percentage of loans that come from partnerships, that’s still a relatively small fraction right now, largely because they’re relatively new,” said Michael Moro, CEO of Genesis. “However, we expect the numbers will become more important over time as a sign of the success of these partnerships.”