21bitcoin Introduces Interest on Euro Balances with Optional Bitcoin Payouts

The Bitcoin platform 21bitcoin is introducing interest on euro balances through its "Bitcoin Bonus" program. After activation, retail customers in Germany and Austria currently receive a variable interest rate of 1.21 percent per year on their euro balances held on the platform. The interest earned can either be paid out in euros or automatically invested in Bitcoin on a monthly basis without a conversion fee.

The partner for this offer is Volksbank Raiffeisenbank Bayern Mitte eG. According to 21bitcoin, euro balances are held there separately from the company’s assets. The bank pays the interest, which 21bitcoin states it passes on to customers without adding its own margin.

1.21 percent interest on euro balances

With this new offering, 21bitcoin is specifically targeting users who already have funds set aside on the platform for future Bitcoin purchases. This may be the case, for example, with a regularly executed savings plan. With limit orders as well, funds may remain in the account for an extended period before a predetermined Bitcoin price is reached and the order is executed.

Once the Bitcoin Bonus is activated, this euro balance currently earns interest at a rate of 1.21 percent per year. The interest rate is variable and may change accordingly. There is no fixed term. According to the company, the balance remains available for Bitcoin purchases, savings plans, limit orders, or withdrawals.

Interest Can Automatically Buy Bitcoin

What makes this offer unique is the optional use of interest earnings. Customers can decide whether the interest should remain as a euro balance or be automatically converted into Bitcoin. If they choose Bitcoin, the monthly euro interest credit is invested in Bitcoin at the current market price.

According to 21bitcoin, no additional fee is charged for this conversion. Interest is paid exclusively on the euro balance. Bitcoin that has already been purchased is not lent out or subject to interest under this offer. Interest is calculated daily and credited at the beginning of the following calendar month after taxes have been deducted.

Partnership with Volksbank Raiffeisenbank Bayern Mitte

From a technical and regulatory standpoint, the Bitcoin Bonus is based on a partnership with Volksbank Raiffeisenbank Bayern Mitte. The partner bank holds the euro balance and pays the interest. According to 21bitcoin, it then passes this interest on in full to its customers.

At the same time, the company points out that the euro balance is intended for the use of its crypto-asset services and not for investment purposes. For users, this creates a link between traditional interest on euro balances and the automated accumulation of a Bitcoin holding.

Addition to Savings Plans and Limit Orders

21bitcoin integrates the Bitcoin Bonus into its existing purchase options. With the Auto-Invest feature, users can regularly purchase Bitcoin. According to the company, starting on the eighth day of an active savings plan, no purchase fees apply to the corresponding savings plan purchases.

With limit orders, on the other hand, customers set their own desired purchase price. The euro balance available until the order is executed can also earn interest when the Bitcoin Bonus is activated. 21bitcoin argues that interest income can thus mathematically offset a portion of potential purchase fees. Whether this is actually the case, however, depends on the balance, holding period, purchase volume, fees, and the applicable variable interest rate.

Banking Product x Bitcoin Savings Model

With the Bitcoin Bonus, 21bitcoin is expanding its offerings to include a product designed primarily to monetize the time between deposit and the actual purchase of Bitcoin. The structure is clearly separated: Volksbank Raiffeisenbank Bayern Mitte pays interest on the euro balance, while 21bitcoin automatically converts the resulting interest credit into Bitcoin upon request.

For customers, however, the familiar price risk remains. If the interest payment is converted into Bitcoin, its future value depends on the performance of the Bitcoin price. At launch, the Bitcoin Bonus is available exclusively to retail customers in Germany and Austria. The feature can be activated directly through the 21bitcoin app.