Though regulatory mechanisms are yet to be pressed in, there is a move to make people earn interest on their crypto deposits or virtual assets. Already, we have considered one option of crypto investment called ETFs. Crypto fixed deposit or fixed income product is the second option.

The tenure of such deposits offered by some exchanges and investment platforms vary between a week and a year. These can be encashed earlier. These are risky products, as these are not regulated. It allows monetisation of idle assets. The transactions are made online. Your crypto holdings are lent to other users as a margin for trading. Even other exchanges can borrow from exchanges to satisfy liquidity needs.

After the tenure of the fixed deposit, the investor gets the principal back with interest. The crypto platform earns the spread between the borrowing and lending dates.

A crypto investment of 100 Bitcoin may earn 10 per cent interest, and thus the investor gets 110 Bitcoin on maturity. The interest earned is also in terms of cryptos. The earnings thus depend on the market value of cryptos on the said date. Demand-supply forces decide the interest rates. The rate of interest could vary between 3 per cent per year to 12 per cent, depending upon the crypto involved. Stablecoins, earn higher interest rates. Returns are promised, but not guaranteed .

One has to be cautious about the fly-by-hight operators. Investors too should invest only a particular percentage of their portfolio in crypto deposits.