BlockFi Review: Interest On Crypto Deposits, Trade and Loan

BlockFi is a different kind of cryptocurrency platform. In addition to buying and selling digital assets, users can deposit virtual currencies and earn interest, with yields on deposits reaching as high as 8.6 percent. Interest-earning is one of the many features BlockFi offers.

In this BlockFi review, we dig deeper into the many products and features that make the service unique.

What Can You Do with BlockFi?

BlockFi offers many features and services. Read on to find out more about each of BlockFi’s products.

BlockFi Interest Account (BIA)

This is perhaps the most popular product that the platform has to offer. It enables users to maximize their return on investment (ROI) on the virtual currencies in their wallets.

However, the annual percentage yield (APY) depends on the type of cryptocurrency you’re holding. For example, those holding Bitcoin (BTC) enjoy an APY of 6 percent, while those who hold Tether (USDT) and other stablecoins watch their balances grow by 8.6 percent every year.

Fortunately, BlockFi doesn’t charge a membership fee for interacting with your interest account. Additionally, there’s no minimum account balance. In addition to eliminating account balance limits and membership costs, BlockFi’s BIA account is easy to set up. All you need to do to get started is to provide your personal information and fund the account.

Notably, the platform offers a calculator that helps users estimate their earnings on deposits. The calculator considers the account balance and the time the user is willing to maintain it.

Cryptocurrency Trading

For those looking to try their hand in crypto trading, BlockFi has an intuitive trading option. Virtual currency traders on BlockFi still benefit from BIA features. As a trader, the cryptocurrencies start accumulating incentives once the trade is over and the funds land in their account.

Notably, unlike other cryptocurrency exchanges in which trades may take longer to be fulfilled, BlockFi gets ahead of the curve by providing instant transactions. Trading on BlockFi is simple; create an account, fund it, and start trading.

Cryptocurrency-backed Loans

BlockFi offers loans backed with virtual currencies. This option allows users to get cash against their virtual assets instead of liquidating their assets. BlockFi does, however, charge a fee for the service. The interest rate can be as low as 4.5 percent, particularly when withdrawing in US dollars.

Note that your loan amount depends on factors like how much you borrow and how much collateral you use. BlockFi updated its loan terms and now requires borrowers to have a 50 percent LTV (loan to value) for some loans.

It’s a fast world, and BlockFi understands this. BlockFi dispenses qualifying loans the same day you apply and collateralize. Also, the platform accepts repayment as early as you have it, even if that means within a few hours of receiving the loan.

Additionally, you can choose to repay the whole amount all at once or in stages. To secure the loan, you need to keep checking your collateral status because of the volatile nature of virtual currencies. A drop in collateral value will require you to deposit more collateral.

Institutional Support

In addition to welcoming retail users, BlockFi also supports institutional customers. Corporate clients access the same benefits as their retail friends. For example, they can borrow, lend, trade, and enjoy perks tied to the BlockFi Interest Account.

BlockFi’s institutional appeal is backed by an array of features such as adhering to enterprise-focused regulations, a corporate-rich lending inventory, and strong backing from institutions like CMT Digital, Morgan Creek Digital, and HashKey Digital Asset Group.

Also, the crypto platform wins conventional institutions’ trust by offering more traditiional financial products and services. For instance, it allows institutions to conduct margin trading and take long or short positions.

Investment funds and virutal currency-inclined firms, among other corporate institutions, benefit from BlockFi’s products and services.

BlockFi Credit Card

BlockFi offers users a Visa-powered credit card called the Bitcoin Rewards Credit Card. It offers a value proposition that’s hard to resist – it allows you to pay for goods and services and receive BTC incentives in return. In February 2021, the platform opened a waiting list to those wishing to apply for the card.

Purchases using the BlockFi Bitcoin Rewards Credit Card earn users 1.5 percent cash back. Unfortunately, the card has a handling or an annual fee of 200 USD. However, the company offers a clever way to pay the fees.

In the first three months, users who spend $3,000 get a bonus of $250.  Users who hold the card for an additional three months unlock 3.5 percent rewards on purchases, in Bitcoin.

Fees and Commissions

A large portion of BlockFi products and services are free, including opening an account and trading. However, cryptocurrency withdrawals incur a fee that depends on which crypto you send off the platform.

Fortunately, BlockFi offers a single free withdrawal each month. On the other hand, loans have an interest rate based on their LTV ratio. For example, loans with an LTV of 50 percent have a rate of 9.75 percent, while those with a 20 percent LTV have a rate of 4.5 percent. Note that there’s an extra two percent origination charge on loans.

Buying and Transfer Limits

BlockFi has no buying limits but has variable withdrawal limits for seven-day periods. For instance, BTC, Ethereum (ETH), and Litecoin (LTC) withdrawals are capped at 100, 5,000, and 10,000, respectively.

Referral and Sign-up Promotions

The platform has a referral program called “Refer-A-Friend,” along with other sign-up promotions. For example, it allows both referrers and the people they refer to earn $10 worth of BTC. However, in our case, since we are a BlockFi Rewards Credit Card holder or a BlockFi referral partner, you are eligible to receive $40 in BTC when you sign up with the BlockFi referral code: 1413a51f. For more information, you may check our BlockFi referral article.

Also, BlockFi runs an affiliate program enabling participants to earn passive income. Unlike the Refer-A-Friend program, the affiliate program includes training and a dedicated manager for guidance.  When affiliates share BlockFi’s benefits with their followers, they receive 0.5 percent of all deposits their followers make.

BlockFi rewards affiliates by wiring directly to an affiliate’s bank account or through PayPal. Unfortunately, while there’s no cap on how many referrals an affiliate can have, BlockFi limits the amount earned per referral to 1000 USD.

If you plan on signing up but you don’t have a BlockFi referral link or code yet, you may use our BlockFi referral code: 1413a51f or use this BlockFi referral link directly and get $10 in BTC for free. Also, get more information about BlockFi’s referral programs and bonus offerings in this article. 

Supported Currencies and Countries

BlockFi supports a wide range of cryptocurrencies compared to fiat currencies. Some top coins on the platform include BTC, USDT, LTC, ETH, PAX, USDC, PAXG, and GUSD.  Additionally, the platform supports the US dollar on its fiat list.

The list of countries BlockFi supports is long but has a few exceptions. Anyone can use BlockFi except for people in countries that are sanctioned by the European Union, United Kingdom, and the United States. In the US, BlockFi is available in 49 out of 50 states. The platform is not available to New Yorkers  due to the state’s regulatory framework around virtual currencies.

How Does BlockFi Make Money? Is BlockFi FDIC Insured?

BlockFi makes money by capitalizing on the difference between borrowing and lending rates. It borrows at a lower rate than the lending charge. Also, the platform has worked with corporate counterparties in the past to provide liquidity to huge borrowers such as investment funds and OTC market makers.

BlockFi works with crypto-focused businesses seeking crypto liquidity to serve users, like virtual currency ATMs. Also, BlockFi applies rehypothecation. This is a practice in which the platform uses loan collateral for its own purposes.

BlockFi is not FDIC insured. However, it protects deposits with Gemini’s strong insurance feature.

Has BlockFi Raised Money Through Funding Rounds?

Yes, BlockFi has raised over $508 million in different funding rounds, earning it a valuation of $3 billion. Its series D funding round amassed $350 million from respected firms such as Pomp Investments, Bain Capital Ventures, and Tiger Global. The funds were channeled to market expansion, acquisition of new opportunities, and boosting innovation. On the other hand, its series C funding round attracted $50 million from top investment firms like Morgan Creek Digital, Winklevoss Capital, Michael Antonov, and Castle Island Ventures.

How Does BlockFi Compare with Celsius

Celsius is among the top BlockFi competitors, as it also offers interest accounts. However, unlike BlockFi, Celsius employs a native currency called CEL to enhance users’ benefits. Celsius allows users to use their interest account in one of two ways.

One option is in kind, while the other is in terms of the CEL token. Notably, interest paid in CEL is usually higher than in kind. However, people in the United States are unable to use the CEL option. If you are also interested in Celsius, you may read our Celsius Review to better understand how it compares with BlockFi.

Another striking difference between BlockFi and Celsius is the interest payment period. BlockFi users get their interest on deposits after 30 days, while Celsius users get it after seven days. Additionally, BlockFi offers a single free withdrawal while Celsius completely scraps the withdrawal fee altogether.

It’s not all bad for BlockFi. The platform beats Celsius by enabling users to set dollar-cost averaging, and its APY on ETH, LTC, and BTC is higher than that of Celsius.

Additionally, Celsius has a lower interest rate on crypto and stablecoins that ranges between five and six percent. Despite offering a one-percent interest rate on loans compared to BlockFi’s 4.5 percent, it has a lower LTV of approximately 30 percent.

Conclusion

If you are looking to earn interest on your cryptocurrency deposits, BlockFi is a decent option. You can easily switch from a passive interest earner to an active crypto trader without leaving the platform.

However, traders need to bear with fewer tradable coins on BlockFi compared to other leading exchanges such as Binance and Coinbase.

In addition to earning interest on deposits, BlockFi allows users to provide their virtual assets as collateral in exchange for a USD-backed loan with a favorable LTV and interest rate.

Offering corporate customers more traditional services builds a critical bridge between the traditional finance world and the cryptocurrency ecosystem.