It’s a truism in finance in an era of low interest rates — on Wall Street and beyond — that investors and savers hunt for yield.
Parking your assets in an account earning only a few basis points revs up the inclination to put those holdings somewhere else. Into a digital upstart, perhaps, that promises several percentage points in yield, in return for creating accounts and holding cryptocurrencies in those accounts.
Call it a modern, digital-only equivalent twist on traditional banking. In this case, Voyager Digital, the cryptocurrency trading platform and app, is spotlighting the yield it pays out on scores of crypto holdings — both in terms of earned interest and in rewards earned.
In the latest news, as reported Tuesday (Nov. 16), Voyager announced a debit card, in partnership with Mastercard, linked to the USDC stablecoin, through which holders earn annual rewards that can be as high as 9%. Members who are enrolled in Voyager’s loyalty program can earn higher rates, up to an additional 1.5%.
In an interview with PYMNTS’ Karen Webster, Voyager CEO Steve Ehrlich said, “Cardholders can earn their annual rewards that are paid monthly by holding USDC with us, but then use that debit card anywhere that Mastercard is accepted.”
Read more: Mastercard, Voyager Team to Make USDC Stablecoin Spendable and Mainstream
The yield is, as we reported, is generated not from lending activities but is funded from Voyager’s trading business and associated trading revenues. The company posts updates on yields, which depend on the minimum account balances and the type of crypto held.
User Growth, and Transaction Growth, Too
The company’s latest results, posted on Tuesday, too, show that transaction-related revenues surged thousands of percentage points, to $43.5 million, compared to $1.6 million. And at the same time, marketing and sales expenses rocketed higher, too, to $16.7 million, from $332,000 last year in the three months that ended Sept. 30.
In essence, Voyager seems to be funding crypto adoption out of its own operations, at least in a sense. Voyager is willing to pay to get accounts. The strategy has momentum, given the latest data, where total verified users on the platform as of the most recent quarter stood at more than 2.1 million, up 23% from 1.8 million at fiscal year fiscal year ended June 30, 2021.
By enabling yield but not funding it through lending activities, Voyager is taking a different approach than traditional banking models, and from decentralized finance. It’s a strategy that recognizes the cross-selling opportunities that exist once an installed base is truly installed — trading over the crypto platform, yes, but also ready and able to take advantage of new services, too. You might term the strategy this way: Come for the yield, stay for the crypto ecosystem.
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