SoFi targets idle crypto cash with interest-bearing tokenized deposit

SoFi Technologies on Thursday ​launched a "tokenized deposit" product that lets customers earn ​interest on cash set aside ‌for crypto ​purchases, while offering protections similar to those of a traditional bank deposit.

Cash held in a SoFi Earn account will generate 4.2% annual interest and ‌be insured by the Federal Deposit Insurance Corporation, which protects eligible deposits of up to $250,000 per depositor if a bank fails. "Too much money in the digital asset ecosystem is sitting idle, leaving massive potential earnings on ‌the table for millions of people," SoFi CEO Anthony Noto told Reuters.

The product moves SoFi into ‌a space historically dominated by non-bank crypto firms. In recent years, funds earmarked for crypto trading were often parked in interest-bearing stablecoins, giving investors a way to earn yield while keeping money ready to deploy. That model has come under pressure after ⁠the GENIUS ​Act, signed last year, barred ⁠stablecoin issuers from paying interest, creating an opening for banks to offer regulated, interest-bearing alternatives through products such as tokenized deposits.

SoFi Earn ⁠will also let users buy crypto directly or transfer funds to another platform. "The primary opportunity is with people ​who already participate in crypto and want that money to keep working and ready to move," ⁠Noto said.

Traditional financial institutions are developing products to tap the crypto market, arguing that bank-issued alternatives offer greater regulatory oversight than stablecoins ⁠issued ​by non-bank entities. In September, a group of 21 financial institutions including Goldman Sachs, Bank of America, Citi and Deutsche Bank, said they planned to create a company this yearto issue a dollar-pegged cryptocurrency ⁠in the first half of 2027.

"Over the next year or so, you're going to see an inflection point. ⁠It is a big ⁠effort to move traditional finance on chain, but I think the economic drivers are just so powerful that it's inevitable," said Sam MacPherson, CEO at ‌digital asset finance firm ‌Spark.