Gemini, the crypto exchange and custodian, is allowing its customers to earn up to 7.4% annual percentage yield (APY) on their holdings through a partnership with crypto lender Genesis.
“We have a lot of customers who look at the interest rate in traditional finance, which is pretty 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 such as the Gemini credit card launched earlier this year.
The APY is consistent with what’s typically seen among centralized crypto lenders, but pales in comparison to yield farming interest rates in decentralized finance (DeFi), which are much higher but more erratic. (Genesis is a subsidiary of Digital Currency Group, which also owns CoinDesk.)
The product is offered in all 50 states, including New York where Gemini has its trust license. Users can get yield on any cryptocurrency available on the Gemini platform now and on Gemini’s GUSD stablecoin at some point in the future. The product is open to active Gemini customers currently and will be rolled out to all Gemini customers later this month.
Gemini collects part of the spread between interest paid on the crypto and interest Genesis charges on its loans to institutions. As part of the partnership, Gemini reviewed Genesis’ financial statements and verified that the lender’s loans are overcollateralized, said Yusuf Hussain, Gemini’s head of risk.
“As far as percentages of loans coming from partnerships, it’s still relatively a small part right now, largely because they are relatively new,” Genesis CEO Michael Moro said. “But we expect the numbers to become more significant over time as a sign of the success of these partnerships.”
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.