Blockfi Launches Bitcoin and Ether Deposit Accounts with 6.2% Interest


#1

Via Coindesk

Cryptocurrency lending startup BlockFi has launched a crypto deposit account that provides compound interest.

Announcing the news on Tuesday, the firm said that the BlockFi Interest Account (BIA) is now live and offers customers an annual interest rate of 6 percent, paid on a monthly basis in cryptocurrency. That monthly interest is then compounded to produce a 6.2 percent annual percentage yield or APY.

“It helps crypto investors grow their wealth with one of the most powerful tools in finance – compound interest,” Brad Michelson, director of marketing at BlockFi told CoinDesk.

Users from across the globe can deposit either bitcoin (BTC) or ether (ETH) to earn interest from the offering and can withdraw their funds at any time, BlockFi said.

Account holdings are custodied at the Gemini Trust Company, co-founded by Cameron and Tyler Winklevoss, according to the announcement. Gemini Trust is regulated by the New York Department of Financial Services and also offers insurance coverage for the digital assets it holds in custody.

While the BIA looks rather like the crypto version of a traditional savings account, Michelson told CoinDesk that the product “doesn’t come with the backing of the federal government like a savings account at a bank does.”

The executive further said that, as BlockFi’s business also includes providing crypto loans to institutions, it can still afford the interest paid out, even if the prices of bitcoin and ether fall. “We charge more to the institutions borrowing the crypto from BlockFi then we pay to depositors,” Michelson explained.

The BIA was first launched in beta version at the start of this year and already holds over $10 million in assets from retail and institutional investors, according to the firm’s figures.

Back in December, BlockFi raised $4 millionin a round that was led by Akuna Capital, with participation from Mike Novogratz’s Galaxy Digital Ventures and Anthony Pompliano’s Morgan Creek Digital, among others.

It also raised $52.5 million last July, in a round led by Galaxy Digital, and further secured $1.55 million early in 2018 with backing from ConsenSys Ventures, SoFi, Kenetic Capital and others.


#2

Will this use fractional reserve lending ?


#3

Eric this is NOT a savings account. This is essentially a corporate bond.

Blockfi will be taking your bitcoin and lending it to institutional short sellers.

They are marketing it as a high yield savings account but its actually an extremely risky debt instrument (risky enough that I would actually argue the yield is way too low to make it worth it).

So in that sense…yes its fractional reserve.

I also do not see their yield being sustainable over a very long period of time…particularly if the market starts moving up.


#4

I saw you posted something like that on Yen. I agree with you. I was curious to know if they were going completely taboo.
Uphold has a similar option called Cred. They give 10% interest on btc and 5% on xrp.
I wasn’t interested.


#5

yes… I would advise anyone using these services to tread super cautiously.

They’re not FDIC insured savings accounts like a bank account (which even that is kind of sketchy but at least its something).


#6

234322335


#7

Notice the marketing buzz words and the fact that they never outright say “savings account”…because it isn’t one.

They also have an article on their website called “5 simple ways to earn BTC” with number 1 being of course to open up a “Crypto Interest Account” with block fi.

Very deceptive marketing people…tread cautiously.

Always read the fine print before you get involved in stuff like this.


#8

I was positive about BlockFi when I saw a headline of an article about the project for the first time. I still am positive but I don’t want to use their service. The first thing I noticed problematic was technical issues – The BlockFi did not browse well (at least when I was last time on the website). However, the project contributes to the entanglement of the progressive situation and so I like it. It shows imperfections of the current modalities of the market. Consequently, We can discuss the problems and project ideas for future experiments. Nevertheless, I would go for that if the interest percentage would be stable and if they would provide a solid solution regarding backed loans.


#9

Yep, still not interested.


#10

For anyone interested