Crypto app Abra launches interest accounts after illegal swaps penalty
Cryptocurrency investing app Abra has today launched interest-earning accounts, as it recovers after settling with US regulators over allegations it illegally offered swaps to users.
Abra will now offer investors up to nine per cent annual interest on their holdings of crypto and so-called US dollar stablecoins — digital currencies tethered to the value of the dollar to make them less volatile.
The update comes after the San Francisco-headquartered company was charged by the US Securities and Exchange Commission this month with selling security-based swaps to retail investors without registering or selling them on a recognised national exchange.
Alongside its Philippines-based partner Plutus, Abra was also charged by the US Commodity Futures Trading Commission with entering into illegal off-exchange swaps with US and overseas citizens.
Abra, which is backed by well-known firms such as American Express and Foxconn, did not admit or deny the accusations. It paid a total of $300,000 in fines.
“Tens of millions of people hold hundreds of billions of dollars in aggregate of their financial net worth in cryptocurrencies. Yet, no traditional bank views crypto as an asset class leaving the community with no opportunity to participate in markets that traditional fiat money takes for granted”, said Abra chief executive Bill Barhydt of today’s announcement.
“We are on a mission to create a simple and honest crypto bank to enable millions of crypto holders to maximise the potential of their crypto assets”.
The Abra Interest account will offer daily compound interest on consumer balances, with the crypto assets held being matched with the liquidity demand from institutional borrowers to calculate the interest rate offered.
Abra said the interest rate would be adjusted periodically, based on the demand for the asset under consideration.
Initially Abra will offer interest on only the most popular crypto coins, including bitcoin, ethereum, tether, paxos and dollar-pegged stablecoins USD coin and true USD.
Prime Trust, a Nevada-chartered Trust Company, will partner with Abra to issue the interest-bearing accounts and retain custody of consumer funds.