That’s a much higher rate than the national average of 0.05% on savings accounts in the U.S.

Gemini, the crypto exchange and custodian founded by the Winklevoss twins, has launched its Earn product effective Tuesday. It offers interest to customers who elect to lend their cryptos. Though the rate of interest various amongst the 26 cryptos that Gemini supports, the rate could be as high as 7.4% APY (annual percentage yield) for Filecoin. Earn offers 3.05% on bitcoin. (CNBC)

Gemini’s Earn

Interest will be earned and compounded daily. Moreover, customers can opt-out and redeem their cryptos at any time.

Gemini loans out the cryptos offered by customers to institutional borrowers, and in return, collects interest from the latter.

Genesis Global Capital is a “lending partner” to Gemini for this purpose. Institutions pay competitive rates for borrowing cryptos, Gemini told CNBC.

“It’s the only cryptocurrency exchange that offers the opportunity for users to earn crypto in every state in the U.S., including New York,” said Noah Perlman, Gemini’s COO in an interview with CNBC.

The product is only available currently to Gemini’s U.S. customers who are active. It will be rolled out to all customers later this month.

Low interest rates

Gemini’s new Earn product could resonate with customers in the current low-interest-rate environment triggered by the pandemic and monetary easing.

Further, a lot of retail customers have invested in cryptos such as bitcoin, which have enjoyed a solid rally during the last year. These customers also sought to escape the depreciation in the purchasing power of the dollar by investing in bitcoin. Instead of keeping the investment idle, these investors could generate yield by lending them out in Gemini’s Earn. Apart from capital appreciation, they could therefore enjoy an additional income stream.

Customers do need a minimum balance to participate in Earn and there are no fees to transfer in or out of the scheme.

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