Crypto.com earn 10% interest on tgbp

Adyinvestment

Malthusian said:

Gary1984 said:

Who's actually borrowing stablecoins at rates of 12%. Nobody I expect, but it's just being advertised to make the 6% interest sound plausible as if there's a business plan behind it. Also, who's going to make you pay it back? Can crypto debts be enforced?

A crypto debt can be enforced in the courts same as any other, subject to jurisdiction, the same as if you borrowed somebody's else's GBP, gold or sheep, but as the point of crypto is to be a sovereign citizen and above the courts, that would be rather missing the point.

Practically speaking it's never going to be enforced as the money will be gone.

Is there any sort of credit risk assessment done before you get your loan? Anyone who's a reasonable risk could get a legit loan for less than 12% Which again makes me think it's just an advertised rate nobody is expected to take in order to make the 6% seem reasonable.

So I could queue up in the bank, spend hours filling in forms, supply all my bank statements, answer lots of tedious questions about how much I'm spending on Fortnite hats, and then eventually I might get a loan.

Or I can press a button and some bro's stablecoins will just fly into my wallet. Which do you think sounds like the best option?

As for the higher interest rate, that's neither here nor there when I'ma get rich quick by buying other cryptocurrencies or trading them with a magic algorithm (all anyone does with borrowed crypto). Who cares if I have to pay back peanuts or a slightly larger bag of peanuts when I'm sitting on a 40-foot gold catamaran?

Also someone implied the 6% rate was fair and banks are ripping us off with 0.5% interest. But mortgage rates are around 1-2%. You can see why savings rates are where they are. If they offered savings at 6% and mortgages at 2% they'd go bust very quickly.

Not if they reinvested the mortgage interest in this new magic cryptocurrency that will help dirt farmers in Venezuela buy Teslas.

That gave me a genuine giggle

chamelion

Been using it for the past 18 months. This board isn't the right place to discuss crypto in general, shoot over to Reddit - CDC has an active community, as does Nexo.

chamelion

Gary1984 said:

Who's actually borrowing stablecoins at rates of 12%. Nobody I expect, but it's just being advertised to make the 6% interest sound plausible as if there's a business plan behind it. Also, who's going to make you pay it back? Can crypto debts be enforced? 

Is there any sort of credit risk assessment done before you get your loan? Anyone who's a reasonable risk could get a legit loan for less than 12% Which again makes me think it's just an advertised rate nobody is expected to take in order to make the 6% seem reasonable.

Also someone implied the 6% rate was fair and banks are ripping us off with 0.5% interest. But mortgage rates are around 1-2%. You can see why savings rates are where they are. If they offered savings at 6% and mortgages at 2% they'd go bust very quickly.

A significant number are. It saves them 20% tax at a cost of 12%. This isn't like borrowing from a bank.

Gary1984

I'm curious, how does it save 20% tax?

MarkCarnage

Gary1984 said:

I'm curious, how does it save 20% tax?

Calling it their 'income' in the parallel universe they inhabit where there is no tax, and the unicorns roam free?

steampowered

Adyinvestment said:

Checking their site for someone with bottom account level status you get 6% interest on most stable coins, to borrow the same amount will cost you 12% interest (the levels change on terms)

So they lend money out at a higher rate of interest than they give on deposits...not exactly rocket science and certainly not a Ponzi scheme.

This is the reason I believe decentralised finance is the biggest threat to the banks and not crypto in general, and also why stable coins will probably eventually be heavily regulated (possibly a good thing)

I don't understand. Why would charging interest on a loan at 12% be a "threat" to the banks?

The cheapest mortgages are less than 1%. The cheapest personal loans are 2.8%. The cheapest credit cards are 0%.

 I'll take my bank interest rate, thank you very much.

Malthusian

chamelion said:

A significant number are. It saves them 20% tax at a cost of 12%. This isn't like borrowing from a bank.

Leaving aside the question of exactly what they are doing with borrowed tokens that creates a liability to income tax (CGT would seem more likely), whatever it is is still subject to income tax whether you do it with crypto, fiat or sheep futures. Evading tax isn't saving it.

Most of them won't have a tax liability anyway as there is no tax on losses.

I recall a bro claiming earlier that people borrowing crypto are making EBIT in the region of 30%pa so paying 12%pa is perfectly affordable. So let's take that at face value (and not ask how because DYOR bro).

I could get a loan in fiat from a bank at say 4%pa (already quite high), convert it into tokens, do my thang, make 26%pa pre-tax after borrowing costs (fully tax relievable), and 20% tax would leave me with 20.8% in my pocket.

Or I could get a loan from a bro at 12%pa, which means I've made 18%pa pre-tax. But I don't have to pay tax because cAnT tOuCh MuH bItCoIn (insert Wolf of Wall Street meme here) so happy days, I've beaten the system by making myself poor.

Aegis

Gary1984 said:

I'm curious, how does it save 20% tax?

Presumably it's because the person in question is supposed to have made enough in some other crypto tokens that they have capital gains tax to pay, so by taking a loan instead they can spend the money while deferring the sale and the tax.  I don't think I'd call that a saving though.

Adyinvestment

steampowered said:

Adyinvestment said:

Checking their site for someone with bottom account level status you get 6% interest on most stable coins, to borrow the same amount will cost you 12% interest (the levels change on terms)

So they lend money out at a higher rate of interest than they give on deposits...not exactly rocket science and certainly not a Ponzi scheme.

This is the reason I believe decentralised finance is the biggest threat to the banks and not crypto in general, and also why stable coins will probably eventually be heavily regulated (possibly a good thing)

I don't understand. Why would charging interest on a loan at 12% be a "threat" to the banks?

The cheapest mortgages are less than 1%. The cheapest personal loans are 2.8%. The cheapest credit cards are 0%.

 I'll take my bank interest rate, thank you very much.

Not the borrowing, but the yield.

If you could put your money somewhere that was guaranteed safe (yes I know this is not the case at this time) and earn 6% interest, this would crush the current banking system, why keep your money in a bank? (remember this is assuming your money is guaranteed safe)

This would completely turn a lot of peoples retirement plans upside down for a start.

And this is just 6% and it is possible to get much higher.

 Hence why I see heavy regulation on stable coins.

User232002

Aegis said:

I expect you're right.  Even if they lent out GBP at 12%, there are still a lot more lenders to go to that undercut that rate, so presumably the default rate is pretty high for unsecured lending at this level.  It wouldn't surprise me to hear that after defaults and profit for the exchange, there would need to be almost as many depositors as borrowers, which again doesn't seem likely.

Default rate on crypto loans currently circa 0%. Amazing to see lots of people that supposedly get crypto and have done lots of research have no idea about how stablecoin based loans actually work.

Default rates. And making money by lending it out at double the APR. Its a good chuckle but its nowhere near the reality. I've posted exactly how its done, go find the posts.

steampowered said:

I don't understand. Why would charging interest on a loan at 12% be a "threat" to the banks?

The cheapest mortgages are less than 1%. The cheapest personal loans are 2.8%. The cheapest credit cards are 0%.

I'll take my bank interest rate, thank you very much.

I could take out a loan right now for tens of thousands of dollars for 1%. Funds in my account within 15 minutes. With no KYC. 

Your headline loan rates aren't given to everyone. TSB advertises 2.8%. Its listed as the cheapest rate for £25k loans right now on MSE. I've had a bank account with them for 5 years, six figure salary, have zero debt and no dependents - they offered my a £12k loan at 13%.

chamelion said:

A significant number are. It saves them 20% tax at a cost of 12%. This isn't like borrowing from a bank.

Ding Ding. We have a winner.

Malthusian said:

Leaving aside the question of exactly what they are doing with borrowed tokens that creates a liability to income tax (CGT would seem more likely), whatever it is is still subject to income tax whether you do it with crypto, fiat or sheep futures. Evading tax isn't saving it.

Taking money as a loan against assets to avoid paying CGT is not tax evasion.

Malthusian said:

Most of them won't have a tax liability anyway as there is no tax on losses.

I recall a bro claiming earlier that people borrowing crypto are making EBIT in the region of 30%pa so paying 12%pa is perfectly affordable. So let's take that at face value (and not ask how because DYOR bro).

I could get a loan in fiat from a bank at say 4%pa (already quite high), convert it into tokens, do my thang, make 26%pa pre-tax after borrowing costs (fully tax relievable), and 20% tax would leave me with 20.8% in my pocket.

Correct. Which is why about 12 months ago I was leveraging up on any credit I could get. Unfortunately, banks aren't super keen on lending out hundreds of thousands of unsecured loans so its only of limited use. Highly profitable though. Particularly back in the day when you could get rates of 100%/yr on the strongest, safest protocols. 300% ish on the riskier ones. Personally got 140% initially on my favourite single sided farm whilst holding the token which did a 10x in price from my original buy position.