Overview of BlockFi
Founded in 2017, BlockFi has consistently been dedicated to providing credit services to markets that have limited access to products as common as a savings account. BlockFi is an independent lender with a strong team built of expertise in the financial sector, as well as the tech industry.
Simply put, the old way of banking isn’t cutting it anymore. With the rising popularity of cryptocurrency, people need to be able to trust a lender that understands blockchain technology. BlockFi aims to bridge the gap between traditional finance and the new world of crypto finance.
BlockFi has offices all over the world, with teams of experts from New York and New Jersey to Poland and Argentina. As of 2022, BlockFi has over 800 employees worldwide and has over $10 billion worth of crypto assets under management.
What are BlockFi’s main services?
BlockFi offers a variety of products and services, depending on your needs. The company works with both individuals and businesses to bridge the gap between the traditional fiat currencies and cryptocurrency. Some of their products include:
- For non-U.S based users, BlockFi allows you to earn interest on your crypto through a BlockFi interest account. While holding onto your long-term investments in a BlockFi interest account, you can continue to earn more cryptocurrency. Everything about your account is transparent and easy to manage online. With a BlockFi interest account, you can also choose the cryptocurrency you want to be paid out.
- A trading account to buy and sell crypto: The BlockFi platform allows you to trade between your different digital assets and earn compound interest along the way. Plus, there are no additional fees. You choose your currency, and you only pay the price that is displayed. There are no hoops to jump through or strings attached. This is truly trading made easy, especially if you’re new to the world of crypto. As soon as you have crypto deposited in your BlockFi account, you can start keeping up with the markets.
- Crypto-backed loans with low interest rates. A BlockFi loan allows you to use your crypto assets as collateral, so you can transfer USD into your bank account as needed. You’ll receive your funds on the same day, and you won’t be penalized for paying your loan back early. So, if you need the money now, you can borrow it safely and securely.
- BlockFi Mobile Wallet for easy management of your crypto portfolio. Available on both iOS and Android, BlockFi’s Wallet makes trading, earning interest and borrowing with your digital assets easy. They also provide tax reporting and forms for U.S based customers, so they can easily file their crypto taxes.
- Personalized Yield for high net-worth clients. BlockFi clients with high net worths may be eligible for personalized white-glove onboarding to the BlockFi platform. An assigned account manager can work with you to get more favorable rates and fees on BlockFi products.
BlockFi also provides institutional services that customize the lending and borrowing experience for traditional currency, cryptocurrency, and stablecoins. Currently BlockFi works with hundreds of institutions and corporations with their crypto currency needs, such as arranging loans, earning yield on holdings or executing large OTC transactions.
The BlockFi Interest Account
The BlockFi interest account allows users to earn yield on their cryptocurrency holdings. This product has been discontinued for new U.S based customers, but is still available to users outside the United States. This policy change came into effect on February 14th 2022.
The current U.S regulatory landscape for crypto interest accounts is evolving. Regulators in the U.S see crypto interest accounts as securities. As such, crypto interest account providers must formally register these products as securities. BlockFi is in the process of working with regulators to bring BlockFi interest accounts back to U.S users.
For the time being, current U.S based users can continue to earn yield in their interest accounts, but they cannot transfer new assets into them. New BlockFi customers, based in the United States, will have to wait until further regulatory clarity is provided.
How does BlockFi make money?
BlockFi makes the majority of their revenue via interest rate spreads between their crypto interest account deposits and outstanding loan balances. This is very similar to how a traditional bank makes money, by charging a higher interest rate on loans than on paying interest on savings account deposits.
BlockFi also generates revenue through different platform fees and spreads, such as fees on the withdrawal of funds and charging a small percentage spread on the trading of crypto.
BlockFi has also raised significant venture capital backings from some of the most prominent VCs in the United States. Much of this privately raised capital has been used to grow BlockFi’s operations and market their products and services to a wider mainstream audience.
What are the fees on BlockFi?
Setting up a BlockFi account and depositing crypto into your interest account are free. However withdrawing crypto from your BlockFi account will incur a fee. The fee for withdrawals depends on the cryptocurrency being withdrawn, and is a fixed fee no matter the amount.
Usually cryptocurrency blockchains with higher on-chain transaction costs will typically have higher withdrawal fees. The sender of the funds has to pay the network fees. As such, BlockFi will pass on these higher network fees to its users when they choose to move funds off of BlockFi.
Buying and selling of crypto, on BlockFi, does not have any fixed fees. Despite not having a fixed trading fee, BlockFi may markup the spot prices you buy or sell at, by up to 1% (In the form of a spread).
If you use your crypto assets as collateral for a loan, you’ll also pay an interest rate. This interest rate depends on the asset you’re looking to borrow. Generally the more volatile the asset you’re borrowing, the higher the interest rate. BlockFi does not have any fees for early repayment of your loan.
Is BlockFi safe to use?
BlockFi is considered a safe platform to use. They are a regulated entity in the United States and adhere to strict security and regulatory standards. They have been in business since 2017, have billions of dollars under management and over 300,000 customers in the United States and hundreds of corporate clients.
Having a large customer base in the U.S, where financial regulation is amongst the strictest in the world, is a positive indicator of BlockFi’s legitimacy as a financial services platform. And the billions of dollars they custody on behalf of their clients further gives confidence to BlockFi’s security practices.
BlockFi works closely with financial regulators in each of the countries and states they operate in. If any sort of regulatory licensing is required to operate in that jurisdiction, BlockFi will have it.
Is BlockFi insured?
Crypto currency deposits at an exchange can’t be insured federally (ie: FDIC insurance), the same way U.S dollar deposits at a traditional U.S based bank are. Because of this, BlockFi doesn’t provide any insurance for user crypto deposits.
Digital currency isn’t a risk-free product. But, BlockFi works with leading crypto asset custodian Gemini to protect your investments. When you deposit cryptocurrency into BlockFi, a small amount of it is placed in a “hot wallet” for investing. These hot wallets are covered by a private insurance policy, so you never have to worry about the value of your assets in the hot wallet exceeding the cost of that policy.
What security features does BlockFi have?
BlockFi understands the importance of protecting your investment(s) and knowing where your money is. That’s why they use 2FA (Two-factor authentication) to secure your accounts. You can enable it using the Google Authenticator app. Once it’s been enabled, you will be required to provide two forms of authentication each time you log in; your password, and a verification code provided by the app that refreshes every 30 seconds.
This extra layer of security will help to keep your accounts safe and ensure that only you will be able to log in. 2FA will help to keep all of your data safe.
In addition to 2FA, again, BlockFi uses Gemini as a primary custodian. Gemini’s security policy is to defend against external threats, limit human error, and protect clients from any internal misuse within their company.
BlockFi takes the security of the assets they hold very seriously. They are industry leaders in crypto exchange security and often set new standards and guidelines that other industry participants follow.
Is BlockFi regulated?
Even though BlockFi is an independent lender, they operate by both state and federal guidelines issued in the U.S. You can feel comfortable using them as your financial institution knowing they adhere to strict guidelines while still offering bespoke savings options and creating a bridge between traditional banking and crypto.
BlockFi works closely with financial regulators around the world to make sure the products and services they offer meet the highest standards of regulatory compliance in the jurisdictions they operate in.
What countries does BlockFi operate in?
BlockFi is used by individuals and businesses in all 50 states of the U.S. They’re also available in most other parts of the world including Canada, most EU countries, South America and Asia. Where BlockFi is available, users are required to complete Know-you-customer (KYC) verification. This means that users will have to submit scans of their IDs (such as drivers license or passport) and biometric verification to confirm their identity.
As of February 2022, because of regulatory restrictions, the BlockFi interest accounts are not available in the United States. Users outside the United States can still open and use the BlockFi interest accounts.
How do I open an account on BlockFi?
Opening an account with BlockFi couldn’t be easier. In fact, perhaps the only thing that is simpler is managing that account once it’s been opened.
To open a BlockFi account, you simply “join” BlockFi through their website or mobile app, and enter some basic information. You’ll then be prompted to perform some basic KYC (Know Your Customer) to verify your identity. After you’ve completed the KYC, you can deposit either crypto or stablecoin into your BlockFi account.
If you want to set up a trading account, the process is similar. You will sign up on BlockFi’s website or app, deposit funds into your account, and hit the “trade” button on your dashboard to instantly start trading with the funds you already have. It’s an innovative way to get involved with the market right away, and you can even earn interest on your trades.
If at any point you have questions or concerns about opening a BlockFi account, you can always contact a client services representative to get more guidance over the phone.
What sort of customer support does BlockFi offer?
Being one of the first U.S based crypto exchanges to offer customer support over the phone, BlockFi has shown its commitment to providing great customer service. BlockFi places a high importance on making sure that its users have the confidence and support they need to invest in this new asset class of crypto.
BlockFi provides an array of customer support options. They can be contacted via in-app or in browser chat at all times during the day. If you prefer to speak to someone directly, you can call a BlockFi client services representative at 646-779-9688. BlockFi’s customer support phone lines are open Monday to Friday from 9:30am to 8pm ET.
For high net-worth individuals, BlockFi also offers tailored support if needed. BlockFi can provide customized solutions for those with a large amount of digital assets they plan to bring to BlockFi. Custom solutions can include offering better yields, more favorable loan terms and cheaper trading fees. This is all based on the clients trading volume and asset value that they bring to BlockFi.