River Offers 3.8% Cash Interest Paid in Bitcoin for USD Deposits

River, a U.S.-based financial services company that provides access to bitcoin
Bitcoin
investment and usage, has just announced a new product that combines bitcoin capabilities with the stability and predictability of the dollar: cash deposits with interest paid in BTC. Offering a 3.8% interest rate, the company aims to expand its range of services by introducing a way to accumulate bitcoin through USD-denominated cash deposits. According to the announcement, these deposits are insured by the Federal Deposit Insurance Corporation up to $250,000 thanks to their banking partner.

“Introducing 3.8% Interest on Cash—Paid in bitcoin. Stop letting your cash lose value to inflation, even in ‘high-yield’ accounts. Unlock the predictability of dollars with the opportunity to build real wealth in bitcoin,” the company posted on its official X account.

This marks something new in the industry. Despite similar approaches that used BTC and digital assets to generate yield outside users’ control, River promises to keep the BTC it holds out of the equation. This means the product operates solely through the USD deposits the company receives. Bitcoin remains separate from the yield generation proposal, and the company adheres to the Proof of Reserve protocol on-chain. This allows users and clients to verify that the company holds the exact amount of BTC its clients deposit.

What Does The Cash Interest Mean?

I reached out to River’s Founder, Chief Executive Officer, and Chief Technology Officer, Alex Leishman, to get more details about this new product. First, he emphasized that the company holds 100% of the bitcoin it receives and highlighted the Proof of Reserve protocol as a way for clients and users to verify this claim.

Since the company partners with an FDIC-insured bank, I asked whether River might become a bank itself in the future, allowing it to handle this new product entirely in-house. “We have a very good relationship with our banking partner, and getting our own bank charter is not something we have any plans to do. It’s an insanely big endeavor,” he explained to me through X direct messages.

“The general idea behind this product is that with bitcoin’s price appreciation, your effective interest rate would have been a multiple of the base interest rate,” he further explained.

Bitcoin And Crypto Lenders Dangers vs. Cash Yield

However, given the negative track record of products like BlockFi and Celsius —both filed for bankruptcy— among other financial service providers that followed a similar path, I asked Leishman what sets River apart.

“BlockFi and Celsius took your bitcoin and did risky things with it to generate yield. We do not touch your bitcoin. Your bitcoin is held in 100% reserve custody. This is only interest on cash,” Leishman emphasized.

Another key difference is that the yield comes from an FDIC-insured bank. “It’s a bank generating the interest on the cash behind the scenes. We auto-convert that cash interest to bitcoin daily to accrue in your account,” he explained. This is a USD-based product, which means that if you only hold BTC with the company and no USD, “you won’t earn any interest.”

According to Bankrate data cited by Newsweek.com, the average interest rate for savings accounts is 0.58%, but there are other products that offer up to 7.50%. While River’s product is competitive, it could be outperformed by legacy banking services like Landmark Premium Credit Union or OnPath Federal Credit Union, which offer 7.50% APY and 7.00% APY on select checking accounts.

There were also some observations and critics around River’s announcement. For example, security analyst and bitcoin commenter JW Weatherman cited the X announcement, addressing some misconceptions within the news.

He questioned the idea behind the product, arguing that companies like River don’t want BTC to be adopted as money. “‘Bitcoin companies’ don’t want bitcoin adopted as money. Money changing parasites feed on confusion,” he posted.

Other Bitcoin Accumulation Options

River’s new product enters the market competing with other ways to accumulate BTC. For instance, Fold, a bitcoin-focused company, offers services and products designed to help people earn bitcoin rewards through everyday spending.

The company primarily operates as a rewards platform where users can earn bitcoin cashback on purchases made with their Fold debit card or by purchasing gift cards through their app.

There are also lending options, like Ledn, a Cayman Islands-based company that allows users to earn BTC through its services. Users who deposit up to 2 BTC earn 1% APY, while those depositing more than 2 BTC receive 2.5% APY.