by Stephan J. Schlegelmilch, Ezra Newman, and Jason Samstein

Digital asset interest accounts, often known as “crypto interest accounts” or “crypto savings accounts,” constitute a rapidly growing segment of the market for digital assets products despite significant regulatory uncertainty.  Investors in digital asset interest accounts lend their crypto assets to a borrower company in exchange for the company’s promise to provide a variable monthly interest payment.  These accounts typically promise interest rates significantly higher than those offered by traditional bank savings accounts or high-yield savings accounts.  While offeror companies often assure investors that the risks in investing in these accounts are no greater than in traditional savings accounts, these accounts often have built-in fees and limits and, importantly, are not backed by federal bank deposit insurance.