Earning interest on crypto deposits

Discussion in 'Digital Currencies' started by mmm....shiney!, May 31, 2019.

  1. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    Crypto.com has released their Crypto Earn product where holders of nominated cryptocurrencies can deposit into an account and earn from 4% - 8% annually (simple interest on principle only). Interest is calculated daily and credited in the currency deposited eg deposit BTC, earn BTC, deposit XRP, earn XRP.

    An opportunity to earn some passive income.

    https://crypto.com/en/earn.html
     
  2. Oddjob

    Oddjob Well-Known Member Silver Stacker

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    With respect, a Bulgarian financial services company offering crypto depo's and loans....Hope they have a decent balance sheet with sufficient capital to pay back deposit holders....Can see this ending in tears.
     
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  3. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    No offence taken.

    It’s a Singaporean blockchain project partnering with Visa to provide a crypto payment platform that enables card holders to spend crypto without having to first convert to their national currency. Their native coin is MCO and they are branching out into other financial services.

    Deposits are not guaranteed as their technology can be the victim of malicious activity (as has happened with many exchanges) the risk rests entirely with the investor - hence the attractive interest rate.

    With respect, if you’re not “into” cryptos then I can see why you’d have misgivings. :)

    Edit to add: this is not to say I don’t have concerns that I may lose my deposit if they get hacked but I’m willing to take the risk as I can see more upside than downside, but I don’t have any concerns about the business itself or the nature of their project.
     
    Last edited: May 31, 2019
  4. BiGs

    BiGs Active Member

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    I remember the Monaco ICO in 2017, and also TenX, both pursuing visa crypto cards and financial loans/deposits. Their own token is listed on some major exchanges. I think this is entirely an honest system. Doesn't mean their loans can't overrun their deposits like any other financial services business. I'd like to see how they look in like 6 months. Might be worth a punt for interest or maybe their own token since they seem to be incorporating a MCO staking system. I doubt they have a financial license to operate for Australians, so you will have zero recourse the event they do go under. Thanks for the link. Looks like they have re-branded at some point.
     
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  5. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    The old bank runs of the past were an effective self-regulatory tool. That’s all changed now of course with government regulation, fractional reserve banking and taxpayer funded deposit insurance schemes.

    Crypto.com’s reputation and plans for the future are what protects investor’s deposits from shonky practices. Hopefully their cyber security measures are enough to withstand malicious attacks.

    Yes they rebranded some time back, as far as TenX goes I think they’ struggling.
     
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  6. BiGs

    BiGs Active Member

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    Not just malicious attacks, but offering lending to 90% of the globe opens them up to the worlds most effective fraudsters. The non-recourse applies to them also, giving out loans to foreign nationals who only have their own local identifications, totally online. They may have a crypto asset backed system of loan though, haven't looked into it. There would still be fraud risk indirectly to the depositors because of this.
     
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  7. Oddjob

    Oddjob Well-Known Member Silver Stacker

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    My appreciation for taking my comments without offence and also for your additional comments re background on the venture.

    You are correct...I'm not across the in's and out of cryptos (but understand the nature of blockchain tech and how and why it will change the wider world of commerce as we know it) but do have an increasing interest for potential investment purposes. My concern re this venture is that the business of deposit taking and making of loans is one that is generally regulated across across the globe to provide some level of deposit safety. With cryto currencies being a relatively new and unregulated form of exchange v hard currency and putting aside the tech issue of "hacking", who is regulating such ventures / enterprises to protect the depositors. A run on Crypto.com could happen just as easy as a run of the mill bank but could the Govt step in?

    I've seen crypto cards such a BTC's offering, which from my read is a simple debit card to the crypto funds you hold with BTC to make a purchase in lieu of cash with the cash purchase price converted to crypto and subtracted from our wallet. Crypto.com's offering is with a third party which can also lend out those crypto value units (for lack of a better term). Visa may well be the vehicle which the depositor uses to undertake a transaction, but do they take any risk?

    I'm as much interested to hear people's views on this for my own education and as to why it's not just another "ponzi scheme" given the rates of return compared to other asset classes and lack of govt regulation / oversight.
     
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  8. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    Firstly, I'll state I'm not here to defend crypto.com I'll try to answer your questions though to the best of my ability. I admit, there is no way for me to be 100% sure of the intentions of the projects founders - I can only go on what they've published ie white papers, road maps and the information available online from their guides, press release statements and website. I deal with them from a position of both trust (as we deal with any merchant) and from the knowledge base I've built.

    A ponzi is as we all know a scheme where early investors are rewarded at the expense of later investors. It doesn't earn any money. It simply pays out the promises it makes by using the deposits of those who arrive later in the food chain. Eventually, due to a variety of forces these schemes generally collapse with the last to arrive at the party holding the bag. From from what I can see of crypto.com's model, it earns money through the fees associated with its Visa card offering, management fees in the event that their investment strategies pay a dividend to those who engage crypto.com to build a portfolio on their behalf, fees on the loans they offer, probably from re-investing the deposits made by the likes of me and fees on the other products that they offer of which I've not availed myself etc. So it's not a Ponzi. They earn money. But hey, in the end it may well be fraudulent and they may well be patiently building a reputation and presence in order to lull in investors before slamming them in a few years to come. Or maybe they're not and they are genuine. I've gone for the latter.

    As far as the lack of government regulation, as an example they have to meet local regulatory requirements in order to offer their Visa card program. But remember, the biggest fraudulent financial schemes operate within the bounds of government legislatory approval eg fractional reserve banking where investor's deposits are multiplied in order to increase the credit available to borrowers in the hope that those investors don't all call for their deposits back at the same time, and of course the biggest ponzi scheme - the government instituted welfare state where recipients earn far more than they've ever invested (if they actually have ever paid any taxes) at the expense of future generations. So a regulated financial environment doesn't necessarily result in a morally defensible financial environment.

    There's always concerns about handing over sums of cash on the promise that it will be returned at a later date with interest, hey, even buying gift cards has burnt people down the line, that's why these schemes are voluntary.
     
    Last edited: Jun 1, 2019
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  9. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    As I'm not interested as yet in borrowing from them I have only given it a cursory glance. But it looks like you need to deposit assets with them, they hold those assets for you and lend you back up to 40% of the total value of those assets you deposited.

    A similar idea was floated on this forum a few years back where owners of bullion could use their holdings to access a loan, presumably the holder of the bullion would trade or arbitrage it in some way to make a profit. I can't remember if the bullion holder offered a full guarantee for the return of the holdings at a later date. I don't think it was well received by this community, probably because the individual offering the scheme was not well known and it may also have had something to do with the mentality of PM holders - we don't like using our PMs as collateral to go into debt for dirty stinking fiat. :D
     
  10. BiGs

    BiGs Active Member

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    That would be better for the risk. But if that's the case then I doubt this is sustainable. They will get way more lending then loaning and will need to either stop the lending interest or make it a market driven %.
     
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  11. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    Actually, I think that the lending aspect of their business venture may well be more sustainable than say their deposit scheme which will rely on their talent with reinvesting cryptos to pay back the depositors.

    I have the advantage of being able to read their T&Cs, being an approved user of their app, and note the paragraph “COMPULSORY LIQUIDATION”.

    They also have the option to refuse a loan in the first place.

    As a “lender” to crypto.com this gives me confidence.
     
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  12. Holdfast

    Holdfast Well-Known Member

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    Cryptocurrencies (eg: Bitcoin) The ATO’s data-matching programs continue to expand and are becoming ever more sophisticated. It is estimated that over 500,000 Australians have invested in cryptocurrency assets. To identify those who may need to declare taxable profits from these dealings, the ATO is collecting information from designated cryptocurrency service providers and matching them to the information disclosed on income tax returns.
     
  13. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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  14. Court Jester

    Court Jester Well-Known Member Silver Stacker

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    NO NO it does not

    the card converts your crypto to USD that you then load onto the card and spend again no where actually accepts crypto as payment for anything

    https://crypto.com/en/cards.html#compare-cards

    Cardholders cannot load cryptocurrency onto their MCO Visa Card. All cryptocurrency will be converted to US Dollars and the US Dollars can be loaded onto the MCO Visa Card for use in purchase and ATM withdrawals
     
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  15. dozerz

    dozerz Well-Known Member Silver Stacker

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  16. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    Thanks, looks like they could have changed their marketing strategy, I'm sure they initially marketed their card as "Buy and spend crypto anywhere".
     
  17. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    I contacted them and they informed me that cardholders can load their cards with crypto, at the point of loading all cryptos are automatically converted to the users native currency.
     
  18. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    Spam reported
     
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  19. Court Jester

    Court Jester Well-Known Member Silver Stacker

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    so basically what they advertise your spending fiat that is converted from cryptos so no different to any other excahnge in existence just a little more convenient and probably a lot more expensive
     
  20. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    More convenient yes, not sure about a lot more expensive. I’ll look into that more when the cards ship to Australia.
     

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