SoFi launches Earn with 4.40% APY, but deposit protection stays inside SoFi

SoFi Earn provides a bridge between traditional banking and the crypto world. The new product allows customers to deposit funds into a bank account and receive a tokenized representation of that deposit, $SOFIE, which can be managed through SoFi’s crypto interface.

The deposit is FDIC insured within applicable limits, meaning the underlying funds are protected by the Federal Deposit Insurance Corporation. This insurance applies to the individual deposit, not to the token itself, which remains on SoFi’s platform.

Customers can purchase $SOFIE with cash from their SoFi Checking and Savings accounts or by selling crypto held in their SoFi Crypto account. There is no minimum balance requirement, and interest accrues daily on the end-of-day balance.

The interest is compounded monthly and credited to the account. The rate is variable, with a current APY of 4.40%. This rate is subject to change at SoFi’s discretion, and the bank may reverse interest payments if a transaction is later found to be unauthorized.

Tokenized deposit and insurance limits

The tokenized deposit agreement treats $SOFIE and its underlying balance as a single legal claim. Holding $SOFIE creates no separate asset in addition to the deposit and no second claim against the bank.

The product FAQ states that $SOFIE is insured up to $250,000. This limit is shared with the customer’s other individual deposits at SoFi Bank, including individual Checking and Savings balances.

Earn is outside SoFi’s expanded deposit program, and the tokenized balance is not eligible for, and will not be placed in, the SoFi Insured Deposit Program. The money stays deposited at SoFi Bank, where it is aggregated with other deposits in the same ownership category to determine insurance coverage.

SoFi’s official records determine the depositor, ownership, deposit amount, available balance and legal status of transactions. When those records conflict with blockchain records or a wallet display, the bank’s records control, subject to correction and applicable law.

Conversion to transferable crypto

Customers can move the value of their $SOFIE deposit into transferable crypto by using the token to buy SoFiUSD, or $SOFID, or another supported transferable asset. The amount stops being an insured deposit at conversion.

SoFi’s advertised 24/7 on-chain access comes through the replacement asset; the insured $SOFIE balance cannot itself move to an external address. The product page explains that customers can check their current rate and accrued interest under Crypto, $SOFIE and Total interest earned in the app or website.

To redeem into bank money, the product page directs customers to Sell, which lands the dollars in their SoFi Checking or Savings account. The legal terms reserve the bank’s right to require at least seven days’ written notice before a withdrawal or transfer, though SoFi says it does not ordinarily require that notice.

The agreement permits SoFi to record $SOFIE and $SOFID through the same smart contract. Sharing a contract does not merge their legal or insurance treatment, leaving each product subject to its own agreement.

Future direct-transfer functionality would require SoFi to expressly enable it with additional terms, eligibility requirements and limits. The agreement makes no promise that SoFi will offer those features.