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BlockFi Crypto Lending Platform Adds Ripple's XRP Coin Support Along With BTC, ETH And LTC Options
BlockFi Cryptocurrency Lending Platform Set To Integrate XRP
BlockFi, a platform that lets users obtain USD loans using their cryptoassets as collateral, has announced plans add Ripple's XRP altcoin to its list of supported cryptos, according to reports on March 4, 2019.
BlockFi Joins The XRP Bandwagon
Per sources close to the matter, BlockFi has hinted it's looking to start supporting XRP, the native cryptocurrency of the Ripple blockchain project.
Reportedly, the BlockFi crypto lending platform uses three basic criteria for coin selection: liquidity, volatility and consumer demand.
BlockFi makes it possible for users to borrow a minimum of $2,000 in fiat using their crypto assets as collateral and the service also attracts an interest rate of 4.5 percent.
BlockFi To Integrate XRP In April Or May 2019
If all goes all planned, BlockFi is reportedly looking to add support for XRP later in April or May 2019, to enable holders of the digital assets to borrow funds with it.
Despite being criticized for being a centralized fintech project, it's worth noting that XRP and the team in charge of it, Ripple Labs have been making significant progress in recent times and this explains why it has attracted the interest of BlockFi.
As reported by Bitcoin Exchange Guide on March 3, 2019, the recent listing of XRP by leading U.S.-based crypto exchange, Coinbase has triggered a massive surge in the XRP daily trading volume, enabling it to overtake bitcoin cash (BCH).
The BlockFi Advantage
Despite the prolonged crypto market bloodbath that has made numerous crypto-focused firms to either downsize or shut down operations entirely, BlockFi remains solidly behind its clients, enabling them to use their digital assets as collateral for huge loans instead of outrightly selling it.
At current, BlockFi is present in 44 states in the U.S. including California and clients of the firm have been able to use the crypto-backed loans for essential projects and other traditional investments.
Commenting on the latest development, CEO of BlockFi, Zac Prince has reportedly said that the primary objective of BlockFi is to provide users with a crypto-powered lending platform that functions exactly like a traditional large scale creditor.
"The Support we've seen from existing clients and investors highlights the massive demand for leveraging Bitcoin and Ether for low-cost crypto-backed U.S. dollar loans. " declared Prince, adding "We are looking to expand our offerings to support more digital assets as well as geographic markets shortly."
At press time, XRP remains the third largest cryptocurrency in the world, with a market cap of $12.68 billion and the price of XRP sits at $0.306107 as seen on CoinMarketCap.
BlockFi Blockchain Crypto Lending Platform Expands Services to the International Stage
BlockFi Expands Lending Services To The International Stage
BlockFi, a blockchain-based platform backed by Galaxy Capital, is taking its lending services to the global market.
The primary objective of BlockFi is to provide incremental liquidity for clients in the cryptocurrency space. Recently, the company expanded its customer service team to onboard Spanish and Mandarin speakers. In Q3 2018, half of the traffic on the BlockFi website came from users residing outside the US. These foreigners were also responsible for 33% of loan applications on the platform.
In a recent interview with the Bitcoin Magazine, BlockFi CEO Zac Prince said that,
"The company felt the need to go global after establishing a strong footing in the US. The global services will adhere to US international business regulations."
Zac admitted that the firm had to comply with certain laws before going international. He further added that,
"BlockFi services are available in all countries that are sanctioned to trade with the US."
BlockFi was established last year with the support of Galaxy Capital, a venture capital firm owned by Mike Novogratz. Galaxy Capital injected $52.5 million into the project, which has also received funding from PJC and ConsenSys Ventures. BlockFi allows users to lend any amount between $2,000 and $100,000. The loans are collateralized by digital assets, and the interest rates vary from 8% to 12%, depending on the borrowed amount. The acceptable cryptocurrencies are Bitcoin Litecoin, Ethereum, and Gemini USD (GUSD).
According to Zac, BlockFi had been contemplating over expanding into the international market for some time. However, the company was hindered by the lack of manpower d resources to execute this vision. Zac mentioned that the integration of stablecoins such as GUSD has accelerated the realization of this goal. This is because they ease international payments by eliminating the need for using traditional banking systems. These traditional systems are costlier due to currency conversions and high remittance fees.
The support for Spanish speakers was encouraged by the growing interest in cryptocurrencies in South America. In this region, many people, especially the unbanked population, are turning to cryptocurrencies as an alternative to hyperinflated and devalued fiat money. Also, cryptos are better for remittance and offer more privacy.
Lastly, Ac revealed that BlockFi has received many applications from Argentina and Brazil. Zac believes that the high numbers are caused by the unaffordable lending options in such countries due to high interest rates. BlockFi enables citizens of the affected countries to access loans quickly and affordably.
Coinbase Ventures and Able Partners Join List of Investors Backing BlockFi Lending Platform
In a recent blog post, BlockFi, a popular non-bank lender for crypto asset owners, has received new investments from Coinbase Ventures and Able Partners. Coinbase Ventures is one of the most important investment companies in the crypto world. Able Partners is an investment fund that focuses on early-stage companies.
BlackFi was able to receive $4 million in a fundraising round that was led by Fidelity and Akuna Capital. The company wants to expand into new business lines such as a potential credit card product.
Although there is no specific information about the investments that these companies did, BlockFi says that this is an extension of their latest $4 million raise. Coinbase Ventures provides financing for promising companies in the space that have teams and ideas that can help the space grow as a whole.
According to the BlockFi Team, the partnership with Able Partners will allow the firm to gain more exposure to a diversified audience of professionals and investors.
BlockFi wrote in this blog post:
“We want to thank our customers for helping us build a company aimed at providing the most trustworthy financial services provider in the crypto industry.”
The company informed that they will keep updating the community about upcoming services and BlockFi products released to the market.
BlockFi offers lending services to cryptocurrency users from all over the world. Individuals can receive a loan and use digital currencies as collateral. That means that users can have liquidity now without triggering a capital gains tax event.
New Interest-Yielding BlockFi Accounts Gather $25 Million from Investors for Institutional Borrowers
Even before the emergence of BlockFi, the crypto marketplace had welcomed a host of crypto-backed lending startups. Some had even announced a lot of irresistible offers, including zero-interest loans for all and instant disbursement of funds.
Yet, despite all these, the entry of BlockFi has left the industry feeling as though it had been missing something important. The amount of attention this lending startup has garnered, especially from the vibrant crypto community, is incredible.
For a company founded in 2017, but had kept a low profile ever since it started issuing crypto-backed fiat loans since the onset of 2018, its thrust into the limelight in 2019 is like a fairytale. But it’s not!
Amongst the funders of exciting projects in the crypto industry, BlockFi is now the go-to startup. This follows the increase in the number of people seeking fiat loans in exchange for their cryptos, an idea that was motivated by the introduction of the attractive interest-bearing deposit account.
An interest-bearing deposit account isn’t an ordinary incentive. For every BTC or ETH held, the account basically rewards the loaned with profits of up to 6.2% annually, something that had never been witnessed before in the industry. And this product is gaining immense traction as evidenced by the sheer number of coins deposited over the last two weeks alone.
Lends Fiat and Retains Crypto – Win-Win For Everyone!
BlockFi is a popular provider of crypto-backed fiat loans. It serves retail customers and currently has two distinct products for its growing base of retail customers. First, it offers fiat loans for cryptocurrencies, an offer that’s now common in the world of crypto lending. The other product is the crypto-funded interest accounts; an offer that has left the market buzzing!
What’s even more incredible is, in exchange for BTC, LTC or ETH, a customer is confident of getting a year-long loan at an interest rate of just 4.5%. The maximum allowable amount is 50% of the value of the coins deposited at the prevailing rates.
Interestingly, as the fiat loan gains interest, the cryptocurrencies deposited is also gaining a monthly interest at an even higher rate. Yes – it earns 6.2% in annual compound interests; a figure that is higher than what one can earn from the US Treasury Bonds by 2-3 tines. And this, according to many, is a deal too good to miss!
$25 Million in Deposits is No Mean Feat, but Skeptics Aren’t Convinced!
Zac Prince who is the startup's founder and CEO says the publicity this company has been receiving lately has led to a $35 million upsurge in the amount of crypto deposited. Astonishingly, a staggering $25 million of it was deposited just recently, after the 5th of March’s launch. Also, of the amount garnered so far, however, 80% is BTC.
Not everyone has warmed up to the allure of getting a handsome return on the crypto deposited, however. One such person is Stephen Palley, an attorney who reads mischief in BlockFi’s 6.2% pricing.
According to him, this lender of crypto-backed loans is shamelessly advertising 6.2%, yet according to the company’s T&Cs, the company is at discretion to alter the rate. Others even warn the public that they shouldn’t be blinded by the appeal of getting 6.2% given that BlockFi, in fact, isn’t insured. Operating without insurance inherently exposes the company and to an extent those who invest in it to the dangers of losing the funds and never getting compensated.
But Caitlin Long, a Wall Street veteran seemingly thinks otherwise. She says that what essentially binds both parties is a counterparty risk of some sort, writing that by “re-hypothecating” the deposits, it could be subjecting itself to legal challenges in some parts in the US.
Out of these and other concerns, there’s a need to explicitly understand BlockFi
It’s crystal clear that there’s some ambiguity surrounding this crypto-backed fiat lender. And so, to better understand the issue surrounding market interest, what the company’s policies postulate and, of course, how the business operates, let’s look at how it operates.
Is There a Benchmark That This Lender Uses to Decide the Interest Rates to Give?
Well, as the CEO says, there’s none. This entity doesn’t take into consideration the same factors as a bank or a mainstream lending institution. The absence of such a yardstick, according to Zac Prince, grants them the freedom to alter the rate almost at will.
Basically, the rate is a ‘loss leader’ and will remain in place for between three and 18 months when its customer base will have grown big enough to sustain the business. Right now though, he says they change it to attract more loan-seekers even though the project is yet to break-even.
What Other Strategies are They Employing to Generate More Profits?
Aside from seeking more clients, this company has an ambitious plan of unleashing new products. They will be doing this every six months in a bid to gather more capital, as evidenced by the Galaxy Digital that helped raised $52.2 million.
In fact, the CEO is openly optimistic that BlockFi will keep raising the capital it needs to grow and, hopefully, get listed as a public limited entity. He expects that the company will keep amassing more amounts regularly in the near future.
Do They Lend the Cryptos Deposited?
Yes, it does!
This is the 3rd major avenue or making profits that BlockFi uses, although it only deals with large financial institutions. The reason they stealthily do this is that they do not view this kind of business as a product worth selling to the retail market. The profits made from the cryptocurrency lent are effectively paid to retail depositors.
The whole of $35 million worth of cryptocurrency at its disposal can’t be wired out to the institutional borrowers, however. A section of it is kept to act as a reserve, although the public isn’t given the exact ratio used in this case.
Winklevoss Duo’s Gemini Trust links the Lender With its Institutional Borrowers
BlockFi’s main customers belong to two groups namely those involved in the futures business as well as those others who have stuck to the traditional financial businesses. And their rates vary, essentially from 4% to 12% with Stablecoins serving as the collateral for the cryptos lent out.
Gemini Trust, a company formed by Cameron and Tyler Winklevoss, handles all that involves moving the crypto deposited and which institutional borrower is to be given the coins. The reason why BlockFi chose Gemini Trust is because of the need for efficiency and professionalism. It even doesn’t even handle the clients’ private keys.
Terms of the loans vary, pretty much like the rates of interest. BlockFi has the freedom to recall a loan with a week’s notice. Depositors also must issue a notice a week before their desired day of withdrawing their deposits.
How it Manages Risk
In response to the risks posed by the rampant volatility of cryptocurrency vis-à-vis the interests to be paid out, BlockFi has a perfect plan. As explained by Prince, mitigating this risk when it comes to fiat is quite simple.
When the amount of cash held by the depositors is at 70% of their collateral, for example, they may issue the ‘pay back the loan’ notice, ask them to add more collateral or basically ‘wait and see.’ And the ‘wait and see’ choice forces them to sell off a portion of the collateral and use the funds to repay the loan.
This same strategy is employed when it comes to institutional investors knock – they may ask them to give more collateral for the cryptos held or take a share of their Stakecoins and sell off.
As you’ve probably noticed, however, the only term that governs the operations of BlockFi and its clients on both ends is how much trust a client has. Also, the loans are designed to cushion each party against default, if it reaches such a point.
When Push Comes to Shove, the Court Settles the Matter
Well, if a borrower absconds repaying the loan, BlockFi heads to the court. The good thing with this business is the fact that it treats a business like a conventional fiat-to-fiat lending transaction. The BlockFi is a licensed US-based lender, a factor that legalizes all of its operations, although it’s yet to operate in all the 47 states.
What the Company’s Terms State
Going through the terms and conditions page of this crypto-backed lender of fiat, you will notice that it states everything that this business engages in. However, the fact that it endears itself to protecting the funds against losses is for the good of the customers.
It also clearly states that the company is obliged to change the terms and one is required to be checking them regularly. For any prospective customer, a hard copy of the contractual agreement is issued and one is advised to store it well and later produce if things go south.
Finally, the CEO welcomes anyone who could be feeling aggravated in any way whatsoever. According to him, the fact that crypto is yet to be regulated means that protecting the company is everyone’s role, including the customer. He signs off by saying that, his business is risky and one must read the T&Cs well beforehand.