Crypto financial services company Blockfi has launched a trading platform supporting three cryptocurrencies. The new offering adds to the company’s existing services: interest-bearing accounts and crypto-backed loans. Blockfi has completed registration with the U.S. Financial Crimes Enforcement Network and expanded its state licenses to cover both lending and money transmission.
Trading Platform Launch
Blockfi announced Thursday the launch of its crypto trading platform for individual and institutional investors. “Blockfi Trading will initially allow holders of cryptocurrencies to seamlessly trade between bitcoin, ether and the Gemini dollar (GUSD) within the Blockfi platform, subject to geographic availability,” the New Jersey-based company explained. CEO Zac Prince commented, “To date, we have focused on providing products to existing crypto investors that are readily available to investors in other asset classes,” elaborating:
With the launch of trading, we are taking a big step in the direction of enabling net new investors to come into the ecosystem.
“Growth of the crypto market overall benefits the entire industry and we’re excited to shift our focus in that direction,” the CEO opined. According to the announcement, trades are fee-free and executed immediately based on current market prices. “Blockfi aggregates liquidity to offer seamless trade execution and pricing. The rates displayed when you place a trade reflect the price you will pay with no additional fees,” the company clarified. Fiat support will be added at a later date. In addition, USDC and litecoin are expected to be supported in early January.
In preparing to launch the trading platform, Blockfi completed registration as a money services business (MSB) with the Financial Crimes Enforcement Network (Fincen), a bureau of the U.S. Department of Treasury. The company also expanded its “state licensing strategy to include money transmission licenses in addition to its existing state lending licenses,” Thursday’s announcement reveals. Blockfi services customers worldwide, including 47 U.S. states. In April, the company began offering its flagship product, the Blockfi Interest Account (BIA), to retail and institutional investors in India.
Blockfi has backing from investors such as Galaxy Digital, Susquehanna, Akuna Capital, Fidelity, Recruit Strategic Partners, Consensys Ventures, Sofi, Coinbase Ventures, CMT Digital, and Morgan Creek Digital.
Interest-Bearing Accounts and Crypto-Backed Loans
Prior to launching the trading platform, the company has two key products: the Blockfi Interest Account and U.S. dollar loans secured with crypto. Clients’ cryptocurrencies are deposited into a custodial account at Gemini, a trust company regulated by the New York State Department of Financial Services. “Blockfi pays interest rates up to 8.6% for balances held in BIA and an ability to borrow via loans at rates as low as 4.5%,” the company’s website describes.
The Blockfi Interest Account lets customers earn compound interest on their BTC, ETH, and GUSD with no minimum balance required. Interest is compounded monthly and paid at the beginning of every month. The annual percentage yield (APY) for 0-10 BTC is 6.2%, which reduces to 2.2% for amounts greater than 10 BTC. For ETH, the APY is 4.1% for 0-1,000 ETH and 0.5% for amounts over 1,000 ETH. For GUSD, the APY is 8.6%. Blockfi allows customers to choose the currency of their interest payments through its product called Interest Payment Flex. For those wanting to earn interest on their BCH, Bitcoin.com has partnered with financial services platform Cred to offer up to 10% interest on BCH and BTC holdings.
For crypto-backed loans, Blockfi’s customers can use BTC, ETH, or LTC as collateral and borrow up to 50% of the asset value in USD for 12 months. The starting interest rate is 4.5%. For example, 7.05 BTC is needed as collateral for a loan amount of $25,000. Loans are funded in USD, GUSD, or USDC directly into clients’ bank accounts or wallets. Customers can make monthly interest-only payments in dollars or cryptocurrency.