Personal finance app Eco hedges its bets on crypto’s fortunes

Eco, a personal finance app that takes deposits and offers savings accounts paying 2.5-5% interest, appears to undertake a lot of banking activities without positioning itself as a bank or a cryptocurrency firm. The app, which has 170,000 people on its waiting list, is able to offer high interest rates by lending deposits out to crypto trading desks at higher rates.

Why should we care?
Eco’s unorthodox source of funding for high interest rates is getting interest from high-profile celebrity investors, including Sean “Diddy” Combs, Kevin Durant, and Justin Blau, the company confirmed this week. Eco earlier this year closed a $26M undisclosed investment round led by a16z Crypto. Eco’s marketing clearly states that it’s not a bank, but its core functions, which include a digital wallet for saving and spending, alongside the savings accounts seems to resemble one. The company’s “not a bank” marketing is reminiscent of the “Don’t Bank. SoFi” tagline that dominated SoFI’s marketing messages in its early years. A blog post from the company highlights banks’ fee-based revenue models. "Eco puts your money back to work for you. It's not a bank, checking account, or credit card — we're building something better than all of those combined,” CEO Andy Bromberg recently said. Accounts are not FDIC-insured.