What is interest in crypto?
Interest in crypto is the return you earn for letting someone else use your digital assets, usually paid in the same coin you put in. It comes from lending your crypto to borrowers, staking it to help run a blockchain, or supplying it to DeFi lending protocols, and the rate is expressed as a yearly percentage. Unlike interest on a bank savings account, crypto interest has no deposit guarantee, rates change often, and what you earn moves with the coin’s price.
What does interest paid on crypto mean?
Crypto interest paid to you is a reward for giving up control of your coins for a period. A platform or protocol takes your crypto, puts it to work, and shares part of the revenue with you, usually daily or weekly.
The interest is normally paid in the asset you deposited. If you lend 1 ETH at 3% a year, you receive about 0.03 ETH after a year, not a fixed amount of euros. That is the key difference from price gains: interest increases the number of coins in your balance, while the asset price decides what those coins are worth.
How do crypto interest rates work?
Crypto interest rates are quoted per year, either as APR (simple interest) or APY (including compounding). Most rates are variable and can change daily with demand for borrowing, network rules and the platform’s own decisions.
- APR is the simple yearly rate. €1,000 of crypto at 5% APR earns €50 in a year, measured in the coin.
- APY includes compounding: interest paid earns interest too. At 5% compounded monthly, the APY is about 5.12%, so the same €1,000 earns about €51.16.
Higher interest rates usually mean higher risk. A platform paying far more than others is either taking more risk with your funds, paying rewards in its own token, or using a teaser rate with minimum thresholds and limits. A stated rate describes the past, not what you will be paid.
Where does crypto interest come from?
Crypto interest comes from three main sources: borrowers paying to use your coins, blockchains paying staking rewards, and lending protocols in DeFi. Knowing which one applies tells you what can go wrong.
Lending to borrowers
On a centralised platform, you deposit crypto into an Earn or savings account and the provider lends it to traders, market makers or other clients. The borrowers post collateral and pay interest; the platform keeps a spread and pays the rest to you. Your risk is the platform itself: if its borrowers default or it mismanages funds, your principal can be stuck or lost.
Staking rewards
Staking is not lending in the strict sense. On proof-of-stake networks such as Ethereum, validators stake coins to confirm transactions and receive staking rewards: new coins plus part of the transaction fees. When an exchange stakes for you, it runs the validator and takes a commission from your rewards. Unstaking can take days, and validators can be penalised (slashing) for breaking network rules.
DeFi lending protocols
DeFi lending protocols use smart contracts to connect lenders and borrowers without a company in the middle. Borrowers must lock up more collateral than they borrow, and the interest rate moves automatically with demand. You keep more control, but you take on smart contract risk, and nobody refunds you if the code is exploited. Liquidity providers in DeFi trading pools earn a share of trading fees instead, which is a different product with different risks.
Crypto savings accounts vs bank savings accounts
A crypto savings or Earn account is not a bank savings account, even if the app makes it look like one. In the EU, money deposited at a bank is protected up to €100,000 per person per bank by the deposit guarantee; crypto held or lent through a platform has no such cover, and investor compensation schemes don’t cover crypto-assets either.
| Bank savings account | Crypto Earn or lending product | |
|---|---|---|
| What you hold | Euros | Crypto or stablecoins |
| Protection | Up to €100,000 per bank (EU deposit guarantee) | None |
| Rate | Set by the bank | Variable, set by the platform or protocol |
| Withdrawals | Usually instant | Flexible, or locked for a fixed period |
| Main risk | Inflation | Price falls, platform failure, smart contracts |
Crypto products come in two types: flexible (withdraw any time, lower rate) and fixed-term (locked for a set period, higher rate). Check the eligibility rules, minimum balance and supported assets before you deposit.
Is crypto interest regulated in the EU?
Mostly not. MiCA licenses crypto exchanges and custodians, but it does not regulate crypto lending and borrowing as such. Several MiCA-licensed exchanges state that their staking and Earn products are not regulated under MiCA, including Crypto.com and Bitvavo (as we checked on 23 October 2026).
MiCA does contain one direct rule on interest: issuers of e-money tokens (euro or dollar stablecoins) and crypto-asset service providers may not grant interest for simply holding them. Be sceptical of any offer to EU residents that promises a yield just for keeping a stablecoin in your account.
The risks: what can go wrong
The main risk is losing more in value than you earn in interest. Three factors drive that:
- Price risk. Example: you stake €1,000 of ETH when it costs €2,000, so you hold 0.5 ETH. At 3% a year you end with 0.515 ETH. If ETH has fallen to €1,600, that is worth €824: you earned interest and still lost €176.
- Platform risk. In 2022 several large crypto lenders, including Celsius and BlockFi, froze withdrawals and went bankrupt, leaving users without access to their funds for a long time. That year Bitvavo also had about €280 million it had lent to Genesis Global Capital become inaccessible when Genesis froze withdrawals; Bitvavo said customer withdrawals were not affected.
- Lock-ups. Fixed terms, unstaking periods and withdrawal queues can stop you selling when the market falls.
How to start earning interest on crypto in Europe
Start small, check the licence and read the product terms before you start earning. A short checklist:
- Check the licence. Use a MiCA-authorised platform from the ESMA register, then check whether its Earn product itself falls under MiCA. It usually doesn’t.
- Ask where the yield comes from. Staking, lending to other clients, or DeFi? If the platform won’t say, don’t deposit.
- Compare net rates. Subtract the platform’s commission and fees, and compare APY with APY.
- Check the withdrawal terms. Flexible or locked, how long unstaking takes, and any minimum thresholds.
- Start small. Use money you can afford to lose, and keep long-term holdings you don’t want to lend in self-custody.
Taxes on crypto interest
Crypto interest and staking rewards can be taxable even if you never sell. In the Netherlands, your crypto, including rewards, counts toward your box 3 assets at its value on 1 January. In Germany, staking and lending rewards are generally taxed as income when you receive them, separately from the rules on selling. Keep a record of every reward: date, amount and euro value.
The bottom line
Interest in crypto means getting paid, usually in coins, for lending, staking or supplying your crypto. It can grow your holdings, but it is not a savings account: no deposit guarantee, little EU regulation of the product itself, and prices that can wipe out a year of interest in a day. Know where the yield comes from before you chase the rate.
Related terms
Questions people ask
Do you get interest on crypto?
Not automatically. Crypto sitting in a wallet or exchange account earns nothing; you only earn interest if you lend, stake or supply it through a product built for that, and you take on extra risk when you do.
How does crypto lending work?
You deposit crypto with a platform or DeFi protocol, which lends it to borrowers who post collateral and pay interest. The platform keeps part of the interest and pays the rest to you, usually in the same coin.
Is crypto lending risky?
Yes. Your coins are exposed to price falls, to the platform or borrower failing and to smart contract bugs, and there is no deposit guarantee. Several large crypto lenders went bankrupt in 2022.
What is the interest rate on crypto?
There is no single rate. Rates are variable and depend on the coin, the product and demand for borrowing; staking rates follow each network's rules minus the provider's commission. Treat unusually high rates as a warning sign.