SoFi Earn Could Help Banks Compete With Stablecoins, Truth Ventures CEO Says

Interest-bearing tokenized deposits could give banks another way to compete with stablecoin providers, but payment use also depends on costs, transfer reliability and spending options, Truth Ventures founder and CEO Varun Datta said.

“You need lower costs, reliable transfers and somewhere practical to spend the funds,” Datta said. He argued that yield, deposit protections and existing customer relationships could also help banks compete.

SoFi announced SoFi Earn (SOFIE) on Oct. 22. Each unit corresponds to a $1 deposit at SoFi Bank. SOFIE’s annual percentage yield was 4.40% as of Oct. 20, and the rate is variable. The product is detailed in TokenPost’s earlier coverage.

Funds represented by SOFIE are eligible for Federal Deposit Insurance Corp. (FDIC) coverage. The limit is $250,000 per depositor at each insured bank, with coverage applied by account ownership category and subject to FDIC rules and limits.

Customers can convert SOFIE 1:1 into SoFiUSD (SOFID). They can then use SoFiUSD to buy crypto in the SoFi app or send it to supported external wallets over blockchain rails.

SoFiUSD is a stablecoin, not a tokenized deposit. It does not earn interest or carry FDIC insurance, so those features apply to SOFIE before conversion. SoFi’s rollout to SoFi Crypto members will continue through November.