It is the age of cryptocurrencies and a great many crypto banks have come up in the recent past. As an increasing number of investors continue to venture into the crypto landscape, there is a clear need to chart out a guide to help beginners pick the best crypto bank. Much like choosing the right bank for fiat money, choosing the best crypto bank or crypto exchange is an essential step in your cryptocurrency journey.
Earlier this year, Kraken Financial became the first crypto company to get a banking charter under Wyoming’s Special Purpose Depository Institution statute. All of this comes in the light of growing enthusiasm for crypto banking amongst customers. A survey by Bit2buzz has revealed that Indian crypto banks and exchanges have seen a massive growth amid the rising COVID-19 crisis. Coinmarketcap has also revealed that the number of women in the crypto industry has increased by 43.24% in the first quarter. As the adoption of cryptocurrencies and banking is finally coming true in the real sense and enthusiasm gathers amongst customers, it makes all the more sense to be well informed about these matters.
To make the right choice, a good start would be to consider the following factors.
1 Interest Rates on Lending and Borrowing
Crypto banks have finally been offering competitive interest rates. For example, on Vauld, the borrowing rate is as low as 8% for Bitcoin and Ethereum, and 4% on BAT. Comparing interest rates for crypto lending and crypto borrowing is an essential step because different exchanges can have varying rates for different cryptocurrencies. On the other hand, depositors earn upwards of 7% on Bitcoin, Ethereum and other major cryptocurrencies.
It’s true though, that interest rates can fluctuate based on the supply and demand of loans and deposits of crypto assets. One of the easiest ways to find crypto banks with the lowest interest rates is by using a price comparison platform that enables users to query and compare rates across different exchanges and banks. You’ll be surprised how much you can save by picking the best crypto bank.
2 Trading Functionality
It is also imperative to look at the trading functions, capabilities and features of the crypto bank. How much does it offer in leverage positions? Does it offer a variety of trading venues and how many cryptocurrencies are available?
Trading features such as auto-matching and margin trading may also be useful to some investors. Some might also be looking for trading in crypto derivative products such as swaps, futures and options trading. If you are a beginner, you might also want to check the payment methods available. Not every exchange may have the option of paying via PayPal, Debit Card or the option to trade with USD EUR.
While many of these features are actually quite rare, a few crypto banks do offer them. Vauld, for instance, not only offers buying, crypto lending, and trading but also margin trading, cross-platform trading and trading with INR.
3 Wallet Features
Cryptocurrency wallets need to be secure and easy to use. It is essential that every crypto wallet necessarily have a private key, two-factor authentication, and protection from hackers.
Other features such as being able to transfer and transact directly via wallets, use of international payment systems, etc. are important as well. The transaction fee is another thing you must keep in mind. While costs should not be so high that they erode your profits, they should also not be suspiciously low.
Quality tie-ups and partners certainly help enhance the capabilities of crypto banks and even widen the range of cryptocurrencies, customer support, security and other aspects of their platform. Crypto platforms are also partnering with banking entities such as co-operative credit societies to provide savings accounts and loans to customers and cater to a wider range of people.
Moreover, having reputed ventures as lead investors is a huge plus. Tie-ups with partners that specialize in custody helps to bring in a lot of expertise to handle the very real security challenges that the centralized crypto ecosystem faces.
For example, BitGo is one such digital asset trust and security company, while LuneX is a venture that invests in high-growth blockchain companies and cryptocurrency assets. Vauld has partnered with both BitGo and LuneX, along with Binance, Tesseract and Three Arrows Capital.
The ideal crypto bank must also be authentic and reliable. In the digital era, and especially in the crypto sector, there’s no dearth of scams. You must do your research and verify that a crypto bank is authentic before choosing it.
But how can you ensure its authenticity?
Well, to begin with, going through customer reviews and rating and looking for the legal registration of the crypto bank are some ways.
Moreover, the bank must also value its customers and have a reliable customer support system. For beginners, customer support and ease of use can be particularly important features. You might also want to go through the websites of your shortlisted crypto banks to assess usability and interface.
Therefore, doing the right research can not only save you from potential trouble but it can also help you save more and have a smoother customer experience.