SoFi Launches First US Consumer Tokenised Deposits With 4.4% Interest and FDIC Protection
SoFi has become the first US consumer bank to offer tokenised deposits, launching a product called SoFi Earn, or SOFIE, that pays a 4.4% interest rate and carries FDIC protection. The personal finance company, which holds a federal banking charter, announced the offering on Thursday. Tokenised deposits are functionally equivalent to cash but are recorded on a blockchain.
The launch sharpens a debate over tokenised deposits versus stablecoins, two forms of digital dollar that are worth the same but sit under different regulatory regimes. Stablecoins such as USDC, owned by Circle and Coinbase, are backed one-to-one by dollars or US Treasuries and can be sent to anyone holding a crypto wallet, but they exist outside the US banking system and cannot pay interest or receive FDIC backing. Banks including Citi have created tokenised deposits for institutional clients to capture blockchain benefits such as instant settlement and round-the-clock money movement within the existing banking framework; SoFi is the first to do so at consumer level.
Tokenised deposits can only move money between parties that both hold accounts with the issuing bank, a limitation stablecoin advocates emphasise. SoFi customers can already earn a competitive rate on the company's savings account and buy its SoFiUSD stablecoin, but chief executive Anthony Noto told Fortune that SoFi Earn will appeal to crypto users who park funds in stablecoins while riding out market swings and want to earn yield. Noto said he tells his team that money not sleeping means it needs to be making money 24/7, not merely moving around the clock.
Noto said customers will be able to buy Bitcoin and other cryptocurrencies with their tokenised deposits, and described crypto companies as "low hanging fruit" for adoption, since they could pay Mastercard and other service providers that also bank with SoFi. He framed the product as another piece in SoFi's suite of financial services, letting individuals and companies toggle between legacy networks such as ACH and wire transfers and blockchain-based options in a single interface.
The launch follows the collapse in Congress of the Clarity Act, a major piece of crypto legislation that foundered in large part over a provision allowing companies to pay interest on stablecoins. The banking industry argued such a provision could threaten financial stability, while the crypto industry and others said banks were protecting a business model that pays consumers little for their deposits.
