It is not just the outlandish returns that some bitcoiners are bragging about these days. There is also the yield.

At a time when interest rates on conventional bank deposits are pinned to the floor — often below 0.5% — financial technology companies are offering to pay owners of bitcoin and other cryptocurrencies annual percentage yields of 2%-6% and sometimes more. You can deposit your coins with a few taps on one of their smartphone apps.

What’s the catch? There are several, actually. In addition to the risk you are already taking in owning crypto, the earnings are paid in cryptocurrencies, too. Token prices could easily fall in value as sharply as they have risen in the past year, wiping out whatever yield advantage you are getting, if you are comparing it to what you could have made investing dollars. And you are essentially lending companies your crypto without many of the protections that come with a bank account, such as coverage from the Federal Deposit Insurance Corporation (FDIC).

Some of the companies hawking yield accounts have websites that look more than a little like an online bank’s. Crypto lender Nexo uses the tagline “Banking on Crypto” and touts the $375m of insurance it carries on custodial assets. What that policy covers, however, is not like FDIC insurance, which protects savers from losses. On a separate page on its site, Nexo says the insurance is in place to protect users against “commercial crime” which includes “physical and/or cybersecurity breach, and/or employee
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