BlockFi is one of the most renowned crypto lending and borrowing platforms in the world. Regulated by the US SEC, BlockFi offers crypto lending, borrowing, and trading services to retail investors and institutions.
If you want to buy cryptocurrencies and earn compound interest on them or use your cryptocurrencies as collateral to take a loan, BlockFi can be an excellent choice for you. However, it’s essential to consider all the aspects, such as security, customer support, and fees, before deciding.
So, is BlockFi a good platform for crypto users? Here is a comprehensive BlockFi review to help you make the right decision.
BlockFi Review: What Is BlockFi?
BlockFi is a US-based bank-like crypto platform that allows you to do more with your cryptocurrency assets. It lets you store cryptocurrencies in a crypto saving account and earn monthly interest. You can also use your crypto assets as collateral to take consumer loans up to $100 million.
You can also buy and sell cryptos in real-time to capitalize on the volatility of cryptocurrencies. BlockFi offers dedicated services for institutions. BlockFi was founded in 2017 and is based in New York City.
BlockFi Team & VC Backing
The founder and CEO of BlockFi is Zac Prince, and the co-founder and SVP of operations is Flori Marquez. Other prominent members of the team are:
- Rene van Kesteren – Chief Risk Officer
- Mahesh Paolioni-Subramanya – Chief Technology Officer
- Jonathan Mayers – General Counsel
- David Spack – Chief Compliance Officer
- Adam Healy – Chief Security Officer
- Amit Cheela – SVP of Finance
The leadership team of BlockFi has decades of experience in the banking and finance world.
BlockFi has raised over $500 million to date, taking the company’s value to $3 billion and assets to over $1.5 billion. One of the initial fundraisings of BlockFi is $350 million in Series D from investors like Pomp Investments and Bain Capital Ventures.
The company also raised $50 million in Series C from Morgan Creek Capital Management. In Series A, BlockFi raised $18.3 million from Valar Ventures and Winklevoss Capital.
As of 2021, BlockFi has 200,000 institution clients and 250,000 retail clients. It has monthly revenue of $50 million, up from $1.5 million in 2020.
BlockFi lists 30 investors on its websites. Some prominent names include CMT DIgital, Coinbase Ventures, Consensys, Galaxy, Hashkey, Kenetic, Morgan Creek, PJC, Purple Arch, Recruit, SoFi, SGP, The Arrows Capital, Valar, Winklevoss, Bain Capital, Tiger Global, Paradigm, and HRT.
BlockFi Loan Rates & LTV
Crypto-based loans are one of the most popular product offerings from BlockFi. Let’s look at the key details associated with BlockFi loans.
BlockFi offers up to a 50% loan to value ratio. This means the maximum loan you can get is 50% of the current total value of your collateral.
Suppose you want to use 1 BTC as collateral, and the current market value of 1 BTC is $50,000. Hence, you’re eligible to borrow up to 50% of $50,000, which is $25,000. The same applies to all crypto assets.
BlockFi accepts four cryptocurrencies as collateral: Bitcoin (BTYC), Ethereum (ETH), Litecoin (LTC), and PAXG.
The loan rates depend on the LTV.
The more the Loan to Value (LTV), the higher the BlockFi interest rate. Here’s how BlockFi charges loan interest rates, also known as annual percentage rate (APR).
- 50% LTV – 9.75%
- 35% LTV – 7.9%
- 20% LTV – 4.5%
The minimum loan amount on BlockFi is $10,000, whereas the upper limit is $100 million.
BlockFi Interest Rates Terms: Supporting Crypto Assets, Lock-in Terms & Payouts Schedule
BlockFi Interest Account BIA allows you to deposit cryptocurrencies in the BlockFi savings accounts and earn interest on your crypto holdings. BlockFi currently accepts deposits in 14 cryptocurrencies and stablecoins, including:
Coming to interest rates, BlockFi interest rates are 4% annual percentage yield (APY) on crypto assets and 7.5% APY on stablecoins.
The lock-in period on BlockFi is seven days. The interest accrues daily, and interest payments are paid out every month. Account-holders can withdraw their funds on the first day of the month. BlockFi claims that there are no hidden fees and minimum balance requirements.
Additionally, BlockFi says it offers market-leading returns with top-notch security. Here are some benefits of the BlockFi investment account.
- The platform provides complete transparency and control over your savings account and the deposited assets. The BlockFi mobile app is available on multiple devices, allowing you to manage your account anytime and from anywhere.
- BlockFi empowers its clients with payment flexibility. Instead of adhering to Bitcoin or Ethereum only. BlockFi lets you receive interest on 14 cryptocurrencies, including stable coins. The payment terms are flexible, and you can withdraw funds whenever you want.
- The process of depositing funds into your interest account is simple. All you need to do is create a new BlockFi wallet, deposit funds, and start earning interest.
How Does Lending & Borrowing Works On BlockFi Account?
BlockFi has one of the simplest and most intuitive interfaces in the crypto space. Even if you are a beginner at crypto, you can lend and borrow cash on BlockFi without any issues. Let’s look at how lending and borrowing works on BlockFi.
- Crypto Lending on BlockFi
Crypto lending on BlockFi is simple.
You need to open an interest-bearing account on BlockFi. BlockFi will show you the interest you’ll earn after a certain period of time. Thereafter, you’ll have to select the asset and amount you want to deposit. You can then deposit investment funds and start earning interest.
Once you have deposited crypto, you’ll earn daily compound interest for the next 30 days. On the first day of the next month, BlockFi will pay the interest amount to you. Then, you can either withdraw your funds or let them stay in your account to earn more interest.
Users must note that while BlockFi and other interest account providers offer guaranteed returns, the risk profile of crypto interest accounts is high. If the market value of the assets you have deposited plummets significantly, you may not be able to achieve the promised returns.
- Crypto Borrowing on BlockFi
BlockFi ensures it creates a seamless borrowing experience for all its users. You need to head to the Crypto-Backed Loans section and enter the loan amount you need (in USD) and the cryptocurrency you want to use as collateral. BlockFi will calculate the collateral needed for the loan.
If your account has the amount needed as collateral, you’ll be able to apply for the loan directly. If you don’t have the funds, you’ll need to add them first. After applying for the loan, you’ll receive funds on the same business day.
BlockFi doesn’t charge any prepayment penalties, and you can pay back the loan amount, along with the interest rate, as early as you want. The maximum loan term on BlockFi is 12 months.
Now, what if you’re not able to pay back the amount you owe within the decided loan term? In that case, the exchange will liquidate your collateral at the current market price.
Suppose you take a $25,000 loan and use 1 BTC as collateral. If you fail to repay the loan, the loan provider will sell 1 BTC at the current market price to recover their losses. Besides, the provider will create an unintended tax bill for you.
BlockFi Review: Other Products & Features
BlockFi offers other features apart from borrowing and lending. Let’s delve into all the other features available on the BlockFi platform.
- BlockFi Trading Account
BlockFi allows you to buy and sell 14 cryptocurrencies in real-time. While depositing your crypto assets for the long-term is a safe option, the gains can take some time to build up. If you want to leverage the volatility of crypto assets to earn money, you can trade cryptos.
BlockFi’s exchange services work similarly to exchanges like Coinbase and Binance. You can open a brokerage account to buy cryptos and hold them for as long as you want.
Once you’re happy with the gains, you can sell them and book your profits. If you have investment advice, you can capitalize upon it using a BlockFi trading account.
However, BlockFi doesn’t have features offered by prominent crypto trading platforms like Binance. It doesn’t have a proprietary charting platform, nor does it partner with chart providers like TradingView. If you want to trade on BlockFi, you’ll need to use another chart visualization system.
Also, you don’t get benefits like margin trading and derivatives trading. BlockFi only supports spot trading, better suited for long-term investors.
Liquidity can be another issue on BlockFi. While the trading volume on BlockFi has grown significantly over the past couple of years, it isn’t as high as other prominent exchanges.
- Business Account for Institutions
BlockFi offers dedicated services for institutions. These include Global Digital Markets, Prime Services, Investment Products, and Corporate Treasury Solutions.
Institutions can enjoy greater liquidity when it comes to trading. BlockFi assigns an account manager to each institution who helps facilitate large-volume trades in real-time. Corporate Treasury Solutions allow institutions to store large amounts of cryptos safely and securely with BlockFi.
Some other benefits BlockFi offers to institutions are:
- Customizable lending and borrowing solutions
- OTC trading and execution
- Innovative investment products
- Secure and flexible deposit and storage solutions with BlockFi Bitcoin trust
BlockFi Prime for institutions comes with the following benefits:
- Real-time streaming quotes
- The 24-hour settlement cycle for trades
- Insights into trade and loan history, along with downloadable term sheets
- Flexible APIs for seamless integration to your systems
- Intuitive UI with built-in calculator
If you’re an institution willing to trade, borrow, and lend digital assets in a hassle-free manner, BlockFi Prime Services can be the right choice for you. It comes with several features and benefits that allow you to make better use of your crypto assets.
- BlockFi Credit Card
BlockFi Visa credit card enables you to pay with crypto on the go. It works like any other credit card and is accepted by millions of merchants worldwide. BlockFi also offers unlimited 1.5% cashback in Bitcoin on every transaction using the BlockFi Visa card.
In case you’re wondering how a crypto credit card works, here is a quick explanation.
Like a regular credit card, a crypto credit card allows you to spend money and earn rewards. The only difference is that crypto credit cards allow you to spend cryptocurrency instead of fiat currency and earn cryptocurrency rewards.
When you swipe a crypto credit card, you borrow some crypto assets from the issuer, which you need to pay back. Many companies offer crypto debit cards. They work like ordinary debit cards, as the crypto assets are withdrawn from your crypto wallet.
BlockFi Lending & Borrowing Fees
BlockFi doesn’t charge any lending fees, and you can deposit your crypto assets and earn interest for free. However, when withdrawing cryptocurrency holdings, withdrawal fees will apply. The withdrawal fee is unique to each cryptocurrency.
For instance, the withdrawal fee for BTC is 0.00075 BTC, and for Ethereum, the withdrawal fee is 0.02 ETH. For stablecoin withdrawals, the fee is $10. Please note that all BlockFi interest account BIA clients can make one crypto withdrawal and one stablecoin withdrawal each month.
When it comes to loans, BlockFi charges a loan origination fee of 2%. The fee remains constant across all LTVs and interest rates.
BlockFi is one of those few crypto platforms that allow you to trade crypto for free. There is no fee for buying or selling cryptocurrencies.
Apart from these fees, users may have to pay transaction fees depending on the payment method used. The fee on the bank account and wallet transfers can vary depending on the payment gateway. There is also a small spread fee (0-1%) on transactions.
Insurance Coverage On Savings Accounts Deposits
Since cryptocurrencies aren’t regulated, crypto deposits on BlockFi aren’t insured by the FDIC or SPIC. However, BlockFi works with an external custodian to secure client funds like most crypto lending and borrowing companies.
BlockFi uses Gemini, a regulated cryptocurrency exchange, as its custodian to secure all crypto deposits on its platform.
Insurance is an essential factor to consider when selecting a platform to borrow money and lend cryptocurrencies. While the security infrastructure in the cryptosphere is constantly improving, the security risks are still high.
Recently, hackers stole around $600 million from the crypto platform Poly Network and wiped out several Coinbase accounts. In such instances, insurance can help users protect their funds.
Since cryptocurrency is not legal tender, it’s not eligible for insurance by the Federal Deposit Insurance Corporation (FDIC) or the Securities Investor Protection Corporation (SPIC). However, several third-party companies, also known as custodians, provide insurance to crypto exchanges and platforms.
Gemini is one such custodian, as discussed earlier. BitGo is another blockchain security provider that acts as a custodian and provides insurance to several cryptocurrency platforms.
Minimum Deposits For Earning Interests & Withdrawal Limits
BlockFi doesn’t have any minimum deposit requirements. You can earn interest on any amount you deposit. However, BlockFi has a tiered structure, where the annual APY you earn depends on the money deposited in your interest account.
BlockFi has three tiers for BTC and ETH and two tiers for other cryptocurrencies and stablecoins.
For BTC, the three tiers are 0-0.25 BTC (Tier 1), 0.25-5 BTC (Tier 2), and >5 BTC (Tier 3). The APY for the three tiers is 4%, 1.5%, and 0.25%, respectively. For stablecoins, the two tiers are 0-50,000 (Tier 1) and >50,000 (Tier 2). The APY for the two tiers is 7.5% and 5%, respectively.
Coming to withdrawal limits, BlockFi imposes a weekly withdrawal limit depending on the underlying asset. For instance, the weekly withdrawal limit is 100 BTC for BTC, 5,000 ETH for ETH, and 1 million for stablecoin.
Though there is no minimum balances or withdrawal requirement, accounts are subject to Gemini’s withdrawal minimums. These include 0.003 BTC for Bitcoin and 0.056 ETH for Ethereum.
BlockFi Account Sign-Up Process & KYC
Creating a BlockFi account is simple, as BlockFi has a seamless registration process. To open a BlockFi interest account, you need to visit BlockFi’s website and click on “Get Started.” Thereafter, enter your legal first name, legal last name, email, and password to create an account.
After signing up, you’ll need to complete the KYC process and verify your identity. BlockFi takes 24-48 hours to complete the KYC process. Once the KYC is complete, you can use all the services available on the BlockFi platform.
KYC verification is becoming a norm in the crypto space. Back in the day, almost all crypto exchanges and platforms offered services without the need for any identity verification. While many platforms still don’t require KYC, the majority of crypto companies have mandatory KYC requirements.
So, why is KYC becoming so important to crypto? Many users believe identity verification goes against the premise of cryptocurrencies – anonymity. However, KYC is a measure for protecting users.
Suppose a user forgets their password and loses access to their crypto wallet or account. In that case, the service provider can verify the user’s identity to help the user restore access to their account.
BlockFi Supported Countries
BlockFi is a global platform available in all countries except those sanctioned by the US, the UK, and the EU.
Countries where BlockFi is not available are Iran, North Korea, Syria, Cuba, Venezuela, Turkey, Afghanistan, Belarus, Central African Republic, the Democratic Republic of Congo, Guinea, Iraq, Lebanon, Libya, Mali, Myanmar, Nicaragua, Russia, Somalia, South Sudan, and Sudan.
In the US, BlockFi is available in all states except New York.
Safety & Security Features: Is BlockFi Interest Account Legit?
BlockFi remains one of the most secure crypto lending and borrowing platforms in the world. It operates under regulations implemented by the US federal and state governments.
Though BlockFi isn’t FDIC-insured, it takes the necessary security measures to provide all its users a safe and stress-free experience. Key security features of BlockFi include:
- BlockFi works with third parties like Gemini, BitGo, and Coinbase to protect users’ funds, with Gemini being the primary custodian.
- BlockFi stores over 95% of users’ funds in multi-signature cold wallets and only around 5% in hot wallets to support real-time transaction requirements.
- BlockFi has mandatory KYC requirements, so its entire user base is verified and identified.
In addition, BlockFi enables users to opt into IP allowlisting, also known as IP whitelisting. By turning this option on, users can restrict withdrawals from other IP addresses. Other security measures taken by BlockFi include SSL encryption, two-factor authentication, and withdrawal authorization.
BlockFi has an amazing customer support team that answers your questions and queries. The response time can be between a few minutes to a few hours, depending on the traffic of queries. In case of any queries, you can contact BlockFi at firstname.lastname@example.org.
BlockFi also has a strong presence on online platforms like Instagram and Twitter. The only drawback to BlockFi customer support is that there is no live chat or phone support. Users need to rely on emails and wait for the customer support team to respond.
BlockFi Pros and Cons
BlockFi offers some amazing features for new crypto investors; however, there are some limitations you should keep in mind. Let’s look at the pros and cons of BlockFi.
- Based in the US and regulated by the SEC
- No loan origination fees, trading fee, monthly fees, or annual fee
- No minimum deposit requirements
- Attractive APY on crypto savings
- Crypto-backed loans at low interest rates
- Insured by Gemini
- Top-notch security
- Available worldwide
- Only one free crypto withdrawal and one free stablecoin withdrawal
- Volatile APY and loan interest rates
- No custodial or joint accounts
- No protection against bank failure
Conclusion: Final Thoughts
To conclude, BlockFi is an amazing platform for beginner and intermediate cryptocurrency investors who want to go beyond traditional financial services and do more with their cryptocurrency assets.
BlockFi is an ideal platform for buying cryptocurrencies and stablecoins and earning interest. You can earn up to 4% APY on cryptocurrencies and 7.5% APY on stable coins, which are some of the best rates in the market. BlockFi charges a low-interest rate of 4.5%-9.5% and has flexible repayment terms when it comes to loans.
On the downside, BlockFi charges a loan origination fee of 2%, whereas most crypto lending and borrowing platforms don’t charge any loan origination fee.
BlockFi also imposes nominal withdrawal clauses, a major factor for institutions and bulk investors to use BlockFi.
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