BlockFi Review: Company Legitimacy Bolsters Competitive Services
In this review we explore the BlockFi Interest Account, a cryptocurrency interest account from BlockFi -- the first US-based and institutionally backed cryptocurrency wealth management company geared towards the worldwide retail market.
Block Fi Interest Account Review
Block Fi Interest Account
Block Fi Interest Account
Pros & Cons
- For interest accounts with less than 5 BTC, BlockFi users get some of the highest rates available on the market.
- Investing through BlockFi does not require stake in BlockFi-tokens.
- Loans are refinanceable whenever a borrower needs.
- Company has legitimate business background and is headquartered in Manhattan, USA.
- Integrates with other BlockFi financial products.
- For accounts more than 5 BTC, BlockFi's interest rates on BTC drop.
- KYC/AML required.
BlockFi's trend of lower rates for larger deposits occurs across their major currencies (BTC and ETH). Interest is paid out monthly and compounds during that time period as well. There is no minimum or maximum balance in BlockFi's interest bearing accounts. Below is a list which outlines BlockFi's current rates.
Rates as of 28/04/20:
- Bitcoin: 0-5 BTC -> 5.1%, more than 5 BTC -> 3.2%
- Ethereum: 0-500 ETH -> 3.6%, more than 500 ETH -> 2.0%
- Litcoin: 3.8% for all LTC deposits
- USDC: 8.6% for all USDC deposits
- GUSD: 8.6% for all GUSD deposits
What BlockFi Does Well
Differentiation From Competition
BlockFi provides its users with the unique feature of being able to accrue interest in a different currency than what you invested. This payment flex plan allows users to passively diversify their cryptocurrency portfolios. Many competitors offer discounts or higher interest rates to users who opt in to using their in-house tokens. BlockFi does not offer such a token which eliminates a level of needless transactions you might find elsewhere. On top of their flex plans and simple account policies, BlockFi does not lock up your investments. Withdrawls can be processed at any time and usually show up in your account within a day. Interest accrued in a BlockFi account also compounds, which means you can earn interest on your interest, a feature unique to BlockFi.
Why You Might Want to Choose Another Service
Despite being headquartered in NY, the interest account service is not available to NY residents. CT is the other U.S. state with no access along with Cuba, Iran, North Korea, Sudan, Syria.
As of right now, BlockFi only offers support for BTC, ETH, LTC, GUSD, PAX, and USDC. This does not bode well for an investor looking to earn passive income on a wide variety of assets.
To Wrap It Up
BlockFi's interest account is most appealing to small-time investors. If you have some spare cryptos lying around, BlockFi may be the choice for you. Their rates get less competitive the more serious an investor you become. Being paid in a different crypto than what you invested is a creative way to diversify your portfolio, another plus for the beginner investor. You can't put a price on security however and BlockFi gives you peace of mind while you earn interest on idle assets.
Block Fi Loan Review
BlockFi Crypto Loan
BlockFi Crypto Loan
Terms: 1 year
BlockFi uses a tiered Loan-to-Value approach to calculate your loan details. Each asset they support as collateral for their loans (BTC, ETH, & LTC) can be staked with various LTV amounts. As your LTV increases, the amount of collateral you need to take out a loan increases. Obviously with more collateral the loan is less risky for BlockFi and thus your interest rate and monthly payment go down. At BlockFi you can apply for loans at the 35% and 50% LTV rate and if you are staking BTC you can also use the 20% LTV rate. You can expect the collateral needed and monthly payments to fluctuate based on the crypto's market price while you are shopping around for a loan. Items such as LTV rates and interest rates are set by BlockFi internally.
Rates as of 28/04/20:
- For BTC you can find interest rates between 4.5% - 9.75%
- For ETH you can find interest rates between 7.9% - 9.75%
- For LTC you can find interest rates between 7.9% - 9.75%
If the value of your collateral increases while in custody of BlockFi, BlockFi will hold on to it until the loan is paid off. If the value of your collateral decreases while in custody of BlockFi, BlockFi will notify you of a potential trigger event (LTV reaches 70%). In the event of a trigger event, you have 72 hours to either post more collateral or pay down the loan balance. If you fail to do either of those things, BlockFi will sell a portion of your collateral in order to bring the LTV rate below 70%.
BlockFi will have your loan processed immediately and you can have your funds on the day you submit your contract. Same goes for when you've paid off your loan. You can get your collateral back within a day (if you used crypto to pay it off, otherwise it takes longer).
What BlockFi Does Well
BlockFi's loan service is relatively new and to increase awareness they have a very lucrative referral program. If you sign up a friend who uses BlockFi's loan program, you receive $50 or 0.10% of their loan amount, whichever is higher. There is no limit to the number of friends you may refer and there is no limit to how much you can earn from referrals. One rule to note is "promotion of referral codes across Google, Facebook and all paid mediums without written approval from BlockFi is strictly prohibited." Although BlockFi encourages users to "feel free to share your Refer-A-Friend link organically on your social channels."
Does Not Affect Credit Score
Taking a loan out through BlockFi does not affect your credit score. BlockFi does not do a soft or hard credit check and information is not reported to any credit monitoring companies. In addition to that, BlockFi also offers advice for those seeking to improve their credit, a thoughtful sentiment which could go a long way for customers who are drawn to this service due to otherwise poor credit.
BlockFi allows you to refinance your loan at any time. This may be advantageous to you in case the price of your collateral increases. This way if you refinance than you can draw additional capital from your previously deposited collateral or take back a portion of your collateral you no longer need to stake.
Why You Might Want To Choose Another Service
This isn't necessarily a reason not to use BlockFi because you will run into similar issues with every loan service provider but BlockFi applies a $15 dollar fee every time a monthly payment fails. This could be for insufficient funds, wire transfers don't go through, etc.
To Wrap It Up
BlockFi offers a reputable loan service at competitive rates. Their platform is easy to use, they are upfront about their fine print and you can rest assured their services are legitimate. Their referral program is so good, you could start your own business simply based off of referring people to BlockFi. All-in-all, BlockFi executes their loan services well, securing their spot within the DeFi arena for the foreseeable future.
Block Fi Company Review
BlockFi Inc. was founded by Zac Prince in 2017. BlockFi is headquartered in Manhattan, New York. They have approximately 51-100 employees and the company has raised about $108 million in private funding.
In order to use BlockFi's services, users must comply with certain security protocols including the uploading of a photo ID. This is pretty standard across all companies in this space. You must also provide the company with a valid mailing address. This is so BlockFi can comply with federal and state laws. Unfortunately for residents of New York and Connecticut, interest bearing accounts are unavailable. On the positive side, a SSN is not necessary to sign up for BlockFi unlike many of its competitors.
Since Gemini is BlockFi's primary custodian, BlockFi users are subject to Gemini limits and fees. Below is a list of information regarding withdrawals of funds.
Withdrawal fees as of 06/02/20:
- Bitcoin: 100 BTC limit per 7-day period, 0.0025 BTC fee
- Ethereum: 5k ETH limit per 7-day period, 0.0015 ETH fee
- Litecoin: 10k LTC per 7-day period, 0.0025 LTC fee
- Stablecoins: 1M per 7-day period, $0.25 fee
BlockFi operates solely through their website with no mobile app available at this time. Their website however is well organized and presents relevant information with a logical organization. The physical investment platform is easy to understand and is useful for visualizing how BlockFi will increase your investment.
BlockFi insures their users through Gemini, BlockFi's primary custodian. Gemini is one of the most trusted exchanges in the cryptocurrency space and BlockFi is the only "crypto bank" partnership the exchange has. In short, BlockFi is just as safe Gemini is. Gemini recently passed a security audit by Deloitte, one of the worlds most trusted auditing companies. Gemini's security policy mandates that the majority of its crypto accounts are kept in cold stored and are covered by crypto-insurance giant Aon. Gemini and Aon recently announced their collaboration on a new insurance company, Nakamoto, which protects Gemini users from cold-storage losses. The $200M coverage limit may be the largest of its kind anywhere in the world. Neither BlockFi nor Gemini store private keys directly which adds another layer of protection in case either company is hacked. Setting up 2FA and a whitelist of addresses on BlockFi is easy and is encouraged via on-site instructions.
Between the six central members of BlockFi's executive suite, there is a combined total of 87 years experience in institutional finance. Many members of their leadership team have successfully managed tech startups and they are no strangers to acquiring investments. The BlockFi team has managed to attract $78M in total investments including a recent $18M investment by Peter Theil's Valar Ventures. The BlockFi team has indicated more investments from third-party sources are underway and they plan on using these funds for even more rapid expansion. In a recent interview with CoinCentral, the BlockFi team discussed their cautious approach to regulation which they believe will set them up for long-term success moving forward.
In order to remain compliant with state and federal law, BlockFi restricts the use of its services to certain geographical areas and bars certain wallets from transferring funds to BlockFi's interest accounts. If you are from New York or Connecticut, you may not use BlockFi's interest accounts. In accordance with federal law regarding MSBs (Money Services Business), BlockFi will not accept deposits from addresses which:
- use mixing services to attempt to obfuscate the source of funds.
- came from exchanges which do not perform KYC screening.
- came from any gambling site.
- came from any corner of the darknet.
As the U.S. government shines a brighter light on the cryptocurrency industry, features such as this will become more common. BlockFi makes sure its users are compliant by mailing them the applicable tax forms (1099), which the individual must take responsibility to file themselves.
To Wrap It Up
BlockFi is a legitimate company which provides the service they advertise. They have backing from some of the largest and most respected players in the cryptocurrency space and tout a strong partnership with Gemini, a highly-trusted crypto custodian. As exchanges like Gemini bring household names like Deloitte into the cryptocurrency fold, expect regulators to increase their focus on the nascent industry. BlockFi with its regulatory compliance and institutional backing has positioned itself well to be a leader in this space for the foreseeable future. Just remember to disable your browser's cookies.