S’pore startup Hodlnaut offers 10% interest rates on your cryptocurrencies

For the founder of the Hodlnaut high yield cryptocurrency savings account, Zhu Juntao has always been fascinated by the way financial systems work. A graduate of Singapore Management University, Jun Tao joined Credit Suisse’s derivatives office for three years before discovering cryptocurrency in 2017.

“I bought my first bitcoin in 2015 and started doing spot arbitrage on the various cryptocurrency exchanges. It was very profitable for me at the time.

However, Juntao was quickly slapped with a hefty 55% capital gains tax in Japan. He found the taxes too high, so he then left the country to return to Singapore.

In 2019, Juntao and his co-founder officially launched Hodlnaut, a cryptocurrency borrowing and lending platform, which allows customers to deposit their cryptocurrencies and earn up to 10% interest rates. .

Earn 10% interest rate on your crypto-currencies

For users unfamiliar with the high interest rates offered in cryptocurrencies, it’s not uncommon to wonder how sustainable this high interest rate is, especially when traditional banks don’t offer an annual interest rate of 1 to 2%.

In the traditional financial world, investors and traders would be familiar with leveraged trading, and leverage is often only provided up to 10 times your collateral – that means you can borrow up to 10 times the amount you have available.

This is also how home loans work, where your property is pledged as collateral to the bank, and the bank can lend you up to 90% of the value of the property.

Image Credit: Hodlnaut

In the cryptocurrency world however, there is leverage up to 100 times. Institutions can borrow from companies like Hodlnaut in order to make a profit margin and use 100 times the leverage in which they could win or lose 100 times. This has fueled demand for cryptocurrency to be used for collateral, with institutions willing to pay up to a 20% rate for cryptocurrencies.

On the backend, what Hodlnaut simply does is lend these cryptocurrencies and share the earned bounty with users.

Getting started with Hodlnaut is easy – after you have opened an account and completed your Know Your Customer (KYC) process, you can simply deposit your cryptocurrencies into Hodlnaut and start earning interest daily.

Currently, Hodlnaut does not allow direct dollar purchase of cryptocurrency, also known as fiat-onramp, on its platform and only accepts cryptocurrency deposits.

“Our current goal is to ensure that we get the best interest rates for our users’ cryptocurrencies and we are not focused on providing a ramp solution. There are other industry players who are now focusing on this problem, ”Juntao told Vulcan Post.

How are they different from similar players

This model is not new as several companies have offered similar offers in recent years. Some of the most notable companies in this space include Blockfi, Celcius, and Gemini.

When asked how Hodlnaut compares to its competitors, Juntao said they currently offer the fairest and highest interest rates to their customers, up to ten percent on stablecoins – a term used to describe cryptocurrencies whose value is pegged to the USD, and six percent to Bitcoin.

Comparison of cryptocurrency interest rates in May 2021
Comparison of cryptocurrency interest rates in May 2021 / Image credit: Hodlnaut

“In addition to offering the best rates, we are based in Singapore and we are a full Singaporean team. Our customers and users can rest assured that they can contact us at any time and we are fully compliant with any regulatory requirements of the Monetary Authority of Singapore (MAS), ”Juntao told Vulcan Post.

To date, Hodlnaut has over 5,000 users who trust them to handle over US $ 300 million in cryptocurrencies. That’s 100 times more than what they managed a year ago, and an even higher amount than what they started with.

Year Assets under management
2019 30,000 USD
2020 3,000,000 USD
2021 300,000,000 USD
Hodlnaut’s assets under management have grown 100 times per year

While Hodlnaut currently claims over $ 300 million in assets under management, things weren’t all rosy for Hodlnaut when it first started out.

We started with my co-founder and I managing just under US $ 30,000 in asset management. As we were growing up, our OCBC corporate bank was suddenly closed without any official reason from the bank.

We received a call indicating that our account will be closed and that we need to go and withdraw the money. I remember going downstairs to get all the money out of the bank, and to this day I remain a definitively banned client of OCBC.

– Zhu Juntao, founder of Hodlnaut

Waiting for green light for crypto licensing in Singapore

As cryptocurrencies gain notoriety and interest among Singaporeans, MAS established its first regulatory framework to govern cryptocurrency services called the Payment Services Act, which came into effect on January 28, 2020.

By law, cryptocurrency providers in Singapore will need to license and be regulated under the authority – this was finally passed in Parliament in January of this year.

Juntao and his team are currently anxiously awaiting the outcome of the MAS license that he has already filed. Companies not licensed under the Payment Services Act are not allowed to operate in Singapore, although Juntao has assured us that MAS has granted them an exemption in this regard.

Although the process of obtaining the official license is taking longer than expected, Juntao believes that Singapore is a country that offers the best environment for financial companies and is confident that they will soon receive the results of the license application.

With the rapid growth of the business, the team is looking to release an iOS version of Hodlnaut so clients can track their portfolio value on the go.

The company is also exploring ways to help its customers access higher yielding products in the cryptocurrency space.

Featured Image Credit: Hodlnaut

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