BlockFi Review

Blockfi announced that as of November 28, 2020, they have suspended several activities on their platform, including new account openings, deposits, and withdrawals. They also stopped processing any funds transfers to third-party wallets and exchanges. These changes are effective immediately and are necessary to ensure the safety of their clients and the integrity of their platform.

What is BlockFi?

BlockFi is an independently owned crypto asset management firm founded in 2017 and based in New Jersey. BlockFi has backing from some of the leading investors in the industry including Morgan Creek Capital Management, Valar Ventures, Susquehanna Government Products, and several others. The main services they offer are fast crypto currency backed loans in less than 24 hours and interest earning cryptocurrency accounts with very competitive rates. Crypto trading is also on their menu of services.

BlockFi Rates

The BlockFi Interest Account for crypto depositors offers favorable rates. The current BlockFi interest rates for savings accounts are:

• Bitcoin: Bitcoin deposits up to 2.5 have an Annual Percentage Yield (APY) of 6%. Deposits over 2.5 BTC receive 3% APY.
• Ethereum: 5% APY
• Litecoin: 6.5% APY
• USDC, GUSD, and PAX: 8.6%
• PAXG: 5%
• USDT: 9.3%

BlockFi interest loan rates depend on the loan to value (LTV) ratio which is derived by dividing the amount of the loan by the value of the collateral. The current rates are as follows:

• 50% LTV: 9.75%
• 35% LTV: 7.9%
• 20% LTV: 4.5%

A 2% origin fee is also charged on all loans.

BlockFi provides cryptocurrency backed loans and interest bearing crypto saving accounts to their customers. They also offer a crypto trading service where users can buy, sell and trade various cryptocurrencies. BlockFi also recently added a credit card to their list of services. Using their credit card earns 1.5% back in Bitcoin with every purchase.

To start lending we recommend checking the BlockFi referral code.

Is BlockFi Safe?

BlockFi cryptocurrency deposits are held by the Gemini Trust Company which is regulated by the New York Department of Financial Services. Gemini is SOC 2 Type 1 security compliant.

Because cryptocurrency isn’t considered legal tender BlockFi accounts are not insured by the FDIC or SIPC. Gemini maintains digital assets offline to reduce the risk and it does insure assets stored with them through AON. To secure your online account BlockFi uses two-factor authentication and as an optional feature offers “Allowlisting” which ensures that cryptocurrency in your BlockFi account can only be sent to known withdrawal addresses. While maybe not as safe as a traditional bank deposit which is backed by government insurance, BlockFi has taken a lot of steps to protect your assets and is safe.

BlockFi APP

BlockFi has a mobile app for both Android and iOS devices. You can find this app on the Apple App Store or Google Play. With the BlockFi app, you can do everything from your phone that you can do with your computer. Users can open interest earning accounts and apply for crypto-backed loans from anywhere with internet access using the app. It also enables funds to be transferred directly from crypto wallets to BlockFi accounts. BlockFi intends to add additional functionality to the app in the future including a trading feature.

BlockFi Interest Account

BlockFi Interest Accounts let depositors earn interest on their crypto assets. Interest rates on accounts are very competitive with others in the industry and far better than you would receive from a traditional savings account. Interest on accounts accrues daily and is paid every month in the same currency as the deposit. If you deposited Bitcoin then interest is paid in BTC. There is no minimum deposit on BlockFi Interest Accounts and no fees. To open an account just click the “Get Started” button in the upper right corner of the page. Enter the requested information and then deposit it into your new account. You may be required to supply some form of identification such as a driver’s license or passport as part of the process. It generally takes less than 2 minutes to open an account and customers begin earning interest as soon as they make their first deposit. The cryptocurrencies you can deposit at BlockFi are Bitcoin, Ethereum, Litecoin, GUSD, PAX, PAXG, USDC, and USDT.  Account holders are entitled to 1 withdrawal a month from their account without a fee. Additional withdrawals will be assessed a small fee based on the type of crypto that is being withdrawn.  There are also withdrawal limits that should be adhered to:

• Bitcoin: 100 BTC per 7 day period
• Ethereum: 5000 per 7 day period
• Litecoin: 10000 per 7 day period
• Stablecoins: 1,000,000 per 7 day period
• PAXG: 500 per 7 Day period

BlockFi Stock

BlockFi is privately held and has no stock. BlockFi is planning a Series D funding round and plans to go public in the second half of 2021 through a special purpose acquisition company.

BlockFi Loan

The BlockFi lending platform enables clients to take out loans in US dollars and secure those loans using their cryptocurrency as collateral. The minimum loan amount at BlockFi is $5000.

BlockFi loans don’t require any credit checks as they are secured with collateral. Interest rates on loans as mentioned above are determined by the loan to value ration. This typically runs around 50% LTV which means users will have to deposit an amount of crypto that is valued at twice the amount of the loan. The cryptocurrency loan collateral may be Bitcoin, Ethereum, Litecoin or PAXG. The duration of most loans at BlockFi is 12 months. There is no penalty if loans are paid off early and the remaining interest does not need to be paid.

The BlockFi loan process is relatively easy and consists of the following steps:

• On the BlockFi website click “Loan” to initiate the process
• Click Apply and provide the requested details
• Wait for loan approval. This will usually only take a few hours
• Review the loan offer and accept
• Transfer the agreed upon collateral from your crypto wallet to BlockFi
• Funds are transferred in US dollars to your bank account via wire or in stablecoin to your crypto wallet
• Make monthly interest payments using US dollars, Bitcoin, Ethereum or Litecoin
• Pay off the principal at the end of the loan term

Borrowers also have the option to refinance the loan at current rates at the end of the term. Unlike with some platforms, there are some basic criteria that need to be met:

• Be over the age of 18
• Not a resident of a US sanctioned country or on a watch list
• Not from the European Union, New York or Washington
• No history of bankruptcies: A full credit check is not done but if you have filed for bankruptcy in the past it can affect your loan
• Enough crypto for collateral: Figure on having to come up with cryptocurrency worth at least twice the amount you want to borrow

One thing to keep in mind when taking out a loan is that cryptocurrencies are volatile and sometimes experience big price swings. If the value of your crypto collateral increases during the term of the loan, that’s great and nothing happens. However, if it drops in value and falls below the agreed LTV it will be necessary to add more collateral to bring the LTV back to 50%.

After completing our BlockFi review we find that the site has a great deal to offer. Interest rates on savings accounts are competitive and BlockFi is one of the few sites to offer compound interest. While they aren’t insured by the FDIC or SIPC assets are stored with Gemini who insures them through AON. The loan requirements are a bit stricter than some sites but the process is still much easier than obtaining a traditional loan. We recommend BlockFi for anybody who wants to earn decent interest rates on their crypto assets or secure a loan in a relatively short time.