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Safely earn 6% on BTC and 8.6% on Stablecoins: BlockFi, Celsius, and Nexo

If you haven’t yet read my introduction post on this topic, Earning Interest on Cryptocurrency Investments & Stablecoins, please read that first.

Let’s give the scenario that you are a longterm believer in cryptocurrency. As such you’ve been slowly accumulating bitcoin over the past several years, dollar-cost averaging in over time. You’ve amassed quite a large amount of bitcoin and are excited for bitcoin to continue to rise back past its prior highs.

In the meantime, you have to treat bitcoin like any long term investment, forget about short term performance and just keep holding.

Several companies now allow you to transfer your cryptocurrency to them and use it to earn interest or to get loans using the cryptocurrency as collateral. Both options allow you to harness the money locked into the cryptocurrency while not actually selling any of it.

Since I’m not needing a loan right now, I’ll touch on that aspect at the end of this article. For now, I’ll talk about the very cool ability to earn interest on cryptocurrencies and stablecoins.

(A lot of the links below have referral codes in them. Please see the end of the table and the end of the post for further details.)

Last updated 3/21/2020 BlockFi Celsius Nexo
Interest rates on Bitcoin 6% APY (0-5 BTC)
(*rates apply as of April 1st)
3.92% APY (*interest rates increase if getting paid in CEL) Not yet, coming soon
Interest rates on Ethereum 4.5% APY (0-500 ETH)
(*rates apply as of April 1st)
2.33% Not yet, coming soon
Interest rates on Ripple N/A 3.15% Not yet, coming soon
Interest rates on Litecoin 3.8% APY (>0) 3.25% Not yet, coming soon
Interest rates on Other Cryptos N/A Yes (1.51-7.25%), Dash, Bitcoin Gold, Bitcoin Cash, Stellar, OmiseGO, 0x, EOS, Celsius Not yet, coming soon
Interest rates on Stablecoins 8.6% APY (GUSD, PAX, USDC) 7.25% (TrueUSD, GUSD, PAX, USDC, Mult-Collateral DAI, Tether, TrueGBP, TrueAUD, TrueHKD, TrueCAD) 8% (TUSD, USDT, USDC, PAX, DAI)
Interest rates on Fiat N/A N/A Yes, 8% (USD, EUR, GBP)
Compound Interest Yes, monthly Yes, weekly Yes, daily
Payout Frequency Monthly Weekly Daily
US Customers Accepted Yes Yes Yes
International Customers Accepted Yes Yes Yes
Crypto Backed Loans Yes Yes Yes
KYC/AML Check Yes Yes Yes
Lockup Terms None None None
Withdrawal Fee First withdrawal each month free No fees No fees
Deposit Insurance Yes, Gemini Custody Yes, BitGo Custody and Lloyd’s for total company up to $100 million Yes, BitGo Custody and Lloyd’s for total company up to $100 million
FDIC Insurance No No No
Token None Yes, CEL (35% bonus if interest paid in this token, brining BTC interest up to 7.27%) Yes, 30% of Nexo’s net profit is paid back as a dividend
Referral Program Yes, 10% of interest your friends earn Yes, deposit of $200 or more earns each person $10 in BTC Yes, referral link available but details of the offer are not
Mobile App/ Website Website Only Mobile App Only (iOS, Android) Both (Website, iOS, and Android)

Comparison of all three

I decided to send the equivalent of $400 to each of the above companies. $400 in BTC was sent to BlockFi and Celsius, while $400 in USDC (a stablecoin) was purchased on Coinbase and then transferred to Nexo.

Signing up was very straightforward for each of them. It basically involved creating an account and then going through a verification process. The verification process may vary depending on your country, but in the United States we have to go through a process called KYC/AML, or know your customer, anti-money laundering.

After confirming name, address, and scanning in a government-issued identification like driver’s license or passport, I was verified. I don’t recall the exact time that it took for each but it was either minutes to a few hours. The verification will take a bit longer if you are living overseas and have a US citizenship/residence.

Once you are verified, the funding of the accounts is very simple. You just send it in from another wallet and it is available as soon as the transaction gets confirmed on the blockchain. This usually takes less than 30 minutes.

Here is what each interface looked like once I added my funds:




The cool thing with Nexo is that since they pay daily, I was able to see an interest deposit already (of around 8 cents!). While daily compounding is nice, I’m having trouble finding if Nexo’s quoted rate of 8% is an APY, which would already take the daily compounding into account as BlockFi’s 8.6% APY does with its monthly compounding.

You’ll also see that Nexo allows you to deposit a ton of different kinds of cryptocurrencies. However, this is only for providing collateral for loans and is not yet available for earning interest (though Nexo says that this is coming soon).

Of the three interfaces, I would rank BlockFi as easier to understand than the other two. Everything is laid out in a more clean manner. Each cryptocurrency and stablecoin has their own page with sections for accrued interest and total interest paid. Celsius’ interface isn’t bad but is built for a mobile display. It seems usable enough.

Nexo, in my opinion, has the worst user interface when looking at it from an interest bearing account. It just lists the market value of each cryptocurrency or stablecoin. You can’t even click on it to see what stablecoins you have. However, the Transactions section (as shown above) is by far the most detailed. I have not been paid any interest yet from the other two, but I’m guessing it will show up as another deposit transaction like when I deposited the initial bitcoin in.

Use of tokens

For those that are not familiar with the terminology, tokens are just a term for the “coins” that you can buy. Bitcoin, ethereum, litecoin, zcash, etc., are all tokens. These technically are utility tokens, though bitcoin is so ubiquitous, that it is becoming a store of value itself. The general utility tokens are those that have some utility on the blockchain. Some might allow you to use the tokens to pay for services, get discounts, etc. However, utility tokens by themselves have no value. They are only worth what others will pay for it. They are not like stocks or security tokens which have actual ownership.

During the ICO (initial coin offering) craze of 2017, companies raised millions of dollars by selling tokens, usually with the implied premise that the tokens would skyrocket in value like bitcoin had. A handful did go up in price, but the vast majority were used as a means to raise money for the company but did not offer anything of real value in return. Think of it like “investing” in a Kickstarter project…you might get early access to the product, but if share none of the benefits if they get bought by a larger company.

BlockFi does not have a token and did not have an ICO to raise money.

Celsius raised $50 million in a token sale in 2018 selling CEL tokens. These tokens can be used for Celsius Loyalty Rewards. If 15% or more of your wallet balance is held in CEL, you get a 35% interest bonus. You can also choose to receive interest payments in CEL rather than in bitcoin and receive a small bonus that way too. Here is an explanation of the CEL token on the Celsius website. Users of Celsius get 1 CEL upon signing up.

Nexo raised $52.5 million in a token sale in 2018 selling NEXO tokens. These tokens earn passive income of 30% of the companies net profits distributed proportionally based on NEXO token ownership. As far as I can tell, there is no utility for earning higher interest rates by owning NEXO tokens. However, NEXO tokens can be used to pay back loans at a lower interest rate and can be used as collateral for obtaining loans. As of now, you do not earn interest on NEXO tokens held in their wallet. Here is an explanation from Nexo on Nexo Dividends.

I will be using BlockFi nearly exclusively moving forward

I initially added the $400 into BlockFi, Celsius, and Nexo on March 13th. I will have to wait until the end of the month for interest to be paid on BlockFi and until this coming Monday for the initial interest to be paid on Celsius. Nexo has been paying daily.

I have since moved nearly all of my bitcoin and most of my ethereum into the interest bearing accounts on BlockFi. Their web layout is outstanding and interest rates are among the best. They don’t provide interest on quite as many tokens as Celsius does but do on most of the big ones. I can also add in stablecoins as well.

I am a big fan of Gemini and the security and regulation that they abide by. BlockFi uses Gemini as its custodian.

Lastly, I like the fact that BlockFi did not sell tokens to raise capital. You get paid in the cryptocurrency that you earn the interest in. A bitcoin deposit earns bitcoin, ethereum deposit earns ethereum, and a Gemini Dollar deposit earns Gemini Dollars. For a small fee, you can choose to receive interest payments in any token you want. For example, I could choose to receive bitcoin interest payments in Gemini Dollars.

With Celsius you can earn different interest rates by controlling more CEL or by choosing to get paid in CEL. There is just something about that that seems a little sketchy to me. This could work out great if CEL takes off in value. On the other hand, I do like the fact that Celsius is actually using its tokens to provide tangible benefits. This will also likely provide a backstop to maintain more stability in the CEL token. That is more than most ICO’s can say!

Celsius does have a great Medium post talking about decentralization and the benefits of the Celsius Network. This decentralization aspect is very appealing, provided it can be done in a secure way within the proper regulations.

Nexo Tokens

This token is much more interesting to me. It has the feel of a security token in a way because you earn a dividend. 30% of Nexo’s net profits are returned to owners of the NEXO token. Due to this, I have chosen to put a small amount of money into NEXO tokens and might increase this moving forward. As of today I have about 1022 NEXO tokens in my account (worth roughly $106). I will have to look into the last dividend payment and decide if it is better to have the money locked up in the token or to have it earning interest as either bitcoin or Gemini Dollar. Right now, the NEXO tokens do not earn interest but are used as collateral for loans.

Frequently Asked Questions

  1. Where are these companies headquartered?
    BlockFi: Jersey City, New Jersey
    Celsius: Offices in New Jersey, New York, London, Tel Aviv
    Nexo: Licensed around the world. Powered by Credissimo.
  2. Any institutional backing?
    BlockFi: Winklevoss Capital, Galaxy Digital, Susquehanna, Akuna Capital, Fidelity, Recruit Strategic Partners, ConsenSys Ventures, SoFi, Coinbase Ventures, CMT Digital, SoFi, and Morgan Creek Digital
    Celsius: Partnerships. CEO created VoIP
    Nexo: About the Company
  3. How secure are they? Is there insurance?
    BlockFi: Funds are stored at Gemini. Gemini is fiduciary under §100 of the New York Banking Law and held to specific capital reserve requirements and banking compliance standards. How Are BlockFi Client Assets Stored?
    Celsius and Nexo: Both use BitGo as their custodian
  4. Is there FDIC insurance?
  5. Is 2FA available?
    Yes, all three offer Two Factor Authentication.
  6. How can interest rates be so high?
    BlockFi generates interest on assets held in Interest Accounts by lending them to trusted institutional and corporate borrowers.
    Celsius: “No, this is not a Ponzi scheme. Unlike Bitconnect that promised 300%+ interest per year, we have a legitimate, working business model and we pay sustainable interest rates. Interest payments are funded by our lending business, we lend the coins users deposit out to hedge funds, institutional traders and exchanges, among other corporate partners. These partners deposit up to 150% collateral with us to secure the coins we lend them, and they pay us interest on those loans. We also lend dollars to our customers, with digital assets as collateral, and earn interest from those loans too. “
  7. Tax implications?
    Yes, you will need to pay taxes on any interest earned.
    BlockFi states that they send out a 1099-Misc.
    Celsius says nothing concrete on their website but a Reddit post says that they are working on sending 1099s to US users.
    Nexo: I do not see anything on their site about 1099s.

How can interest rates be so high?

Please see Question #6 above. Additionally, I found this comment from BlockFi on Reddit “Too good to be true? Help me understand“:

We are able to pay the 8.6% interest out to our clients by lending those funds deposited out to our loan borrowers. Our loan borrowers borrow USD collateralized by a minimum of 200% of the loan value. For example, a borrower taking a $50,000 USD loan would need to collateralize that loan with $100,000 worth of Bitcoin or Ether. Additionally, we have a margin system set in place which request margin calls and liquidate collateral as necessary to ensure loan performance. To date, we have had a perfect payback record. Borrowers have a strong incentive to payoff their loans and interest given the excess collateral that we hold. Further, collateral liquidations may trigger undesirable tax consequences to that borrower as well.

Where can I sign up?

Do not sign up for any of these any longer!

Update: December 10th, 2022. So most of these have termed out to be scams or severely understated the amount of risk. I have since removed links to these sites and do not recommend opening an account with them even if they still allow it. The only way they were able to generate yields as high as they did was by doing very risky things with your crypto.

I thought I was getting yield that was backed by overcollateralized loans (and therefore more safe), but I was mistaken.

20 Responses

  1. Alex says:

    Scary that if any of these go down I believe your coins are going with it.

    • scott says:

      When you say “go down,” do you mean the value of bitcoin or the company itself? The funds are held by Gemini Custody, one of the top exchanges and wallets. If you aren’t willing to keep cryptocurrencies at a place like Gemini, Coinbase, etc, then this is most definitely not for you. And, I understand that. I have a Trezor as well as keep some of my cryptocurrency there.

  2. desidividend says:

    i was burned before in similiar platforms in 2017,i will try to stay away from them
    desidividend recently posted…recent BuysMy Profile

  3. Jennifer says:

    Hi Scott, thank you for putting this table together, this is very useful. I noticed the BTC interest (APY) from BlockFi states as 6% in the table but your user screenshot indicates 4.9%, is there a reason for the difference? (Same thing goes for ETH)

    Thank you!

    • scott says:

      Good catch, Jennifer! The new rates will apply as of April 1st, according to an email from the CEO. I’ll add that note to the chart later today.


  4. Ross says:

    Great comparison. Looking forward to seeing updates on how BlockFi works out for you

    • scott says:

      I’ve accrued $56 in interest so far. The first interest payout will be tomorrow. I’m excited to see it! I’ll do an update with the interest payouts from all three of the companies in the next few days too.

      Thanks for commenting, Ross!

  5. Aniket Singh says:

    Great comparison, want to see how much interest Nexo will provide in bitcoin. Till than I will invest bitcoins in BlockFi. Thanks for the comaprison😉

  6. Whether we like it or not, crypto is the future and it’s worth investing

  7. John says:

    Ive been hacked and lost 3 bitcoins before so im really nervous using these lending platforms. Are they really safe and are they insured?
    John recently posted…How to Buy Bitcoin On Coinbse + Receive Up To $159My Profile

    • scott says:

      Hey John,

      How did you lose your 3 bitcoins before? If you were holding these on a hardware wallet (like the Trezor), then the only way you could have been hacked is if someone got a hold of your private keys. If held somewhere online (where you do not control the private keys), then you are reliant on the security of that third party. All of the above lending/interest earning platforms do have insurance that will cover loses if they ever get hacked.

  8. SAIL PHONES says:

    Great content! I really liked this. IMO in the tokenized future

    Will fund your first Bitcoin Wallet

  9. Great post! thanks for sharing the valuable information. I totally agree with your thoughts. keep it up.
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  12. Kalpana says:

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