SoFi launches tokenized deposit with 4.2% annual interest

SoFi Technologies launched a tokenized deposit product on Thursday, October 22, offering 4.2% annual interest on cash customers keep ready for cryptocurrency purchases, according to Economic Times Markets, which carried comments made to Reuters.

The product, SoFi Earn, combines interest payments with Federal Deposit Insurance Corporation protection for eligible deposits of up to $250,000 per depositor in the event of a bank failure. Customers can use the account to buy cryptocurrency directly or transfer funds to another platform.

Chief executive Anthony Noto described the target market as existing crypto users who want to earn a return on money awaiting investment without losing the ability to move it. He argued that idle cash across the digital-asset ecosystem represents a substantial missed earnings opportunity.

Banks seek an opening in crypto cash

The launch brings SoFi into a market traditionally served by non-bank crypto businesses. Investors have used interest-bearing stablecoins to earn income while keeping funds available for trading.

According to the report, the GENIUS Act, signed in 2025, prohibited stablecoin issuers from paying interest. That restriction has opened space for banks to compete through regulated, interest-bearing alternatives such as tokenized deposits.

The distinction matters for customers: the reported FDIC protection applies to eligible deposits if a bank fails, not to losses on cryptocurrency subsequently purchased with those funds.

Wider push into digital assets

Other major financial institutions are also preparing bank-linked digital-asset products. In September, a group of 21 institutions, including Goldman Sachs, Bank of America, Citi and Deutsche Bank, announced plans to establish a company in 2026 to issue a dollar-pegged cryptocurrency in the first half of 2027.

Sam MacPherson, chief executive of digital-asset finance firm Spark, predicted a turning point over roughly the next year as traditional finance moves more activity onto blockchain infrastructure. That remains an industry forecast, rather than an established outcome.