Top Staking Platforms
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Investors love generating passive income, but plenty of market experts claim that cryptocurrency lacks the ability to provide a source of income. That’s not entirely true. Staking (as well as a few rewards programs) can generate interest income from the crypto that you own right now.
You can earn rewards through staking by locking up your crypto to help run the blockchains that support certain cryptocurrencies. If you’re interested in staking or a crypto rewards program, picking the right crypto exchange is essential. This will ensure that you get access to the right resources and the highest yields.
To help you choose the right crypto exchange for staking and rewards, Forbes Advisor has surveyed the best crypto platforms for staking available in the U.S.
We performed an in-depth assessment of the features and options offered by nearly 25 cryptocurrency exchanges, crypto trading apps and brokerage platforms that offer crypto trading options. To identify the best exchanges for staking, we looked at eight key variables to assess each platform:
- Basic Trading Features. Key metrics included the number of cryptocurrencies available to trade, the number of fiat currencies accepted, the exchange’s overall liquidity and trading fees.
- Advanced Trading Features. We looked at the availability of complex trading features like advanced order types and volume discounts for frequent trading.
- Platform Availability. While some of the best crypto exchanges are available everywhere, others have widely varying degrees of accessibility to different features by country and by U.S. state.
- Customer Service. Available types of customer support.
- Educational Resources. We evaluated the educational content offered by each platform.
- Crypto Rewards Credit Card. A few platforms offer crypto rewards credit cards.
- Security and Storage. Types of storage options, security and insurance available, plus an assessment of any large-scale hacks of each exchange over its lifetime.
- Staking and Rewards. Some platforms allow users to stake selected cryptos and earn interest payments.
These eight variables helped us benchmark the staking and crypto interest features, among others, of the crypto exchanges and brokerages we surveyed. The sum of weighted values across all or some of these key factors was calculated for each ranking to award each brokerage or exchange its overall rank.
What is staking?
Staking is a unique feature allowed with some cryptocurrencies. When users stake their cryptocurrency, they lock a set amount of their crypto funds for a certain period to help maintain operations on a particular proof-of-stake blockchain system.
A proof-of-stake mechanism is a method for some cryptos to verify transactions and consensus on their blockchain networks. With this method, users are given an incentive of rewards when they stake their coins.
What cryptos can I stake?
According to Staking Rewards, more than $132 billion are locked up in supporting proof of stake. The cryptocurrencies with the highest staking market cap include ETH, SOL and ADA, in which the typical annual yield is around 4% to 5%.
While there are many cryptos available that are yield-bearing, the most common cryptocurrencies that traders stake for passive income are:
• Ethereum 2.0
• Chainlink (LINK)
• Polkadot (DOT)
Note rewards on the Ethereum network are typically locked up until the Ethereum 2.0 network is complete. Also of note, more than 10% of Ethereum is staked. Depending on the platform, traders can also stake stablecoins like USD Coin, Dai (DAI) and Tether.
How does staking work?
There are a vast number of cryptocurrencies and crypto exchanges that allow staking, and even some crypto wallets support crypto staking, too.
While Forbes Advisors ranked Gemini, KuCoin, Kraken, Coinbase and Binance.US as the Best Crypto Exchanges for Staking and Rewards, other crypto exchanges offer staking and rewards for crypto holdings. Bitstamp and eToro are a few examples.
Is staking risky?
Staking requires a “vesting,” or lock-up, period, where users can transfer or use their tokens. Users need to research the crypto they’re staking since they will not be able to conduct transactions with their token(s) for some time.
Cryptocurrency exchanges typically require a minimum lock-up period when you stake your crypto. And if a particular crypto is volatile, your tokens might be locked up (for staking), leaving you unable to sell.
Are my staking rewards taxable income?
There is no definitive IRS guidance on income taxation from crypto staking. In 2014, the IRS issued a notice that cryptocurrency is to be treated as property for federal income tax. But there is no guidance related to tax treatment for staking rewards.
That said, exchanges like Coinbase will issue users a 1099-MISC form if their crypto earnings from staking exceed $600. Other exchanges that send form 1099-MISC include Bitstamp, Binance.US, Gemini and Crypto.com, to name a few.