BlockFi offers a cryptocurrency wallet, trading, cryptocurrency-backed loans, and a cryptocurrency-rewards credit card. Non-US customers can earn interest on BlockFi Interest Account assets.
Borrowing against your cryptocurrency holdings is yet another perk of using BlockFi. When money is tight, borrowing may be an option instead of selling the assets. Because of this, you won’t have to worry about selling in a weak economy.
This article will explain what is BlockFi? How can BlockFi provide loan services while still allowing you to earn interest on deposits.
What is BlockFi?
Company Overview
BlockFi is a cryptocurrency custodian that lets its customers use their cryptocurrencies as collateral for USD loans. Flori Marquez and Zac Prince started it.
BlockFi started in August 2017 in Jersey City, New Jersey, where it is still based. Up to a Series C, the company has raised $158.7 million.
“We are in the very early stages of this market,” Prince told Crunchbase. “Everyone is working together to grow the market and make it available all over the world.”
“We’re lucky to be in a place where our business is growing quickly because cryptocurrency is gaining popularity and making sense right now.”
Pros Explained
Lots of unique features, including a credit card
BlockFi is doing what a lot of other similar companies are doing and adding new features to its platform to help bring in new users.
It has a central exchange for trading tokens, a mobile wallet app for accessing its exchange on the go, lending programs backed by crypto, a crypto credit card, and the ability for people outside the U.S. to earn interest on their holdings.
The credit card is probably the most unusual of these. Companies that are in direct competition with each other, like Crypto.com, offer debit cards with crypto rewards instead of credit cards.
But BlockFi lets you use a credit card, which makes them different in that way.
And it’s not just any card; the credit card has good benefits, like 1.5% unlimited crypto back, which is like cash back but with crypto rewards instead, and no annual or foreign transaction fees.
Unique institutional backing
BlockFi’s goal is to change the way banking works. BlockFi says it is the only independent lender with institutional backing.
Its main goal is to be the go-to company for people who want the benefits and experience of traditional banking without giving up the ability to work with the decentralized finance sector.
No extra fees for trades
Most exchanges charge fees for trading, staking, and other transactions. Users should consider these fees before trading or withdrawing cryptocurrency from an exchange.
A lot of centralized exchanges charge around 3% per trade on average.
BlockFi is not like that, though. When you buy or sell on BlockFi’s exchange, this platform takes all trade fees into account.
To put it another way, you get what you see. This is part of what BlockFi wants to do to make trading cryptocurrencies easier. When the math is done for the user, there is also less room for error on their part.
Loans backed by crypto
One of the most popular crypto products on the BlockFI platform is crypto-backed loans, and for good reason. Crypto holders can get loans and use their tokens as collateral. This gives them a lot of ways to use their tokens.
Cons Explained
Problems with the law
The trouble BlockFi got into with the SEC earlier this year is one of the most worrying things about it. This problem started because BlockFi wasn’t registering “offers and sales of its retail crypto lending product.”
BlockFi still says it didn’t do anything wrong, but it ended up paying the SEC a $50 million fine and stopping all activities that weren’t covered by the Investment Company Act.
This could be a problem for people looking for a trustworthy company to invest in crypto with. After all, problems with managing rules and restrictions from the government won’t make people feel good.
Services not available in a certain area
Because of problems with managing and keeping up with government regulation standards, US-based users couldn’t use BlockFi’s loans or interact with their BIA accounts, which was how they earned interest on their holdings in the exchange, until recently.
The problem has since been fixed, at least to the point where BlockFi users can once again take out loans. But people who live in the U.S. still can’t get BIA accounts.
The high APY on these BIA accounts has been an attractive feature, so the fact that so many people can’t get them is something to keep in mind.
Small number of coins
When trying to invest through the BlockFi platform, users may notice that the number of tokens that can be traded is one of the lowest in its class. With only 15 tokens, both stablecoins and crypto tokens, listed on the exchange, the choices are very limited.
Users who want to buy coins when they first come out won’t be able to do so on this platform, and there doesn’t seem to be much evidence that the number or variety of tokens will grow in the near future.
Not having to do with custody
BlockFi is a centralized exchange, which means that you have to prove your identity during the account setup process. It also means that the exchange has control over the tokens you buy, trade, or otherwise use on the platform.
Some users might not like that because they want to keep control of their tokens, and if the exchange has custody, your tokens could be lost if the exchange goes down.
Reviewing of BlockFi
Products and Services
The functionality of some of the tradable assets on BlockFi is restricted. The capabilities associated with various assets are detailed below.
| Trading Feature Comparison | ||||
| Assets | BTC, ETH, UNI, LTC, LINK, BAT, PAXG, DAI, USDC, BUSD, PAX, GUSD | DOGE, BCH, ALGO | SOL, ADA, DOT, FIL, AVAX, ATOM, MATIC, BNB, NEAR, FTM, SAND, MANA, TRX, GALA, AAVE, AXS, EOS, SRM, FTT, HBAR, XTZ, LRC, OMG, MKR, COMP, YFI, CRV, SUSHI, 1INCH, GRT, CHZ, ENJ | |
| Availability | US and Non-US Clients | US and Non-US Clients | Non-US Clients | |
| Features | Buy/Sell | YES | YES | YES |
| Trade with other assets | YES | YES | YES | |
| Fund from personal wallet | YES | NO | NO | |
| Withdraw to personal wallet | YES | NO | NO | |
Credit Card With Rewards
Users of BlockFi are eligible to apply for the BlockFi Rewards Visa Signature Credit Card, which provides 1.5% cash back in cryptocurrency and has no annual fee.
You may also be eligible for cashback offers on certain trades involving Bitcoin. Your BlockFi account will receive the monthly deposits of the cryptocurrency rewards.
You won’t be charged any annual or foreign transaction fees, and your annual percentage rate (APR) can range anywhere from 14.99% to 24.99%. The card is not available to people living in New York state and does not support transferring existing balances.
The BlockFi card could be an interesting product for people who are interested in a more limited crypto investing strategy using credit card rewards points;
However, it is crucial to keep in mind that the rewards rate on the BlockFi card is comparable to the rewards rate on other cards that reward you in cash back.
Loans
Although we don’t advise most everyday investors to get involved with cryptocurrency loans, BlockFi does make them available to those who are interested.
If you have Bitcoin, Ethereum, or Litecoin that you can put up as collateral for a loan, you may be able to borrow up to half of the value of your cryptocurrency holdings.
The loan comes with no prepayment penalties and rates that start at 4.5 percent, but it does involve a certain amount of risk.
In the event that the value of your cryptocurrency drops by an unacceptable amount, you may be required to sell some of it or add more cryptocurrency to the account in order to keep up with the requirements.
Lending
How does interest accrual work on the BlockFi platform, which is presumably one of its selling points? BlockFi automatically begins accruing interest on qualified cryptocurrency holdings immediately.
Every month, account holders receive a check for the interest that has accrued over the previous month.
The amount of interest you earn daily on your crypto holdings is proportional to both the type of asset and its market value. Larger balances earn less interest than smaller ones due to a tiered structure.
When you deposit three Bitcoin, the first Bitcoin will earn a 6.00% APY, while the other two Bitcoins will earn a 2.00% APY.
| Currency | Amount | APY (as of Apr. 19, 2021) |
| Bitcoin (BTC Tier 1) | 0 – 1 | 6.00% |
| Bitcoin (BTC Tier 2) | > 1.0 to 20 BTC | 2.00% |
| Bitcoin (BTC Tier 3) | > 20 BTC and above | 0.50% |
| Binance (BUSD) | > 0 | 8.60% |
| Chainlink (LINK) | > 0 | 5.50% |
| Ethereum (ETH Tier 1) | 0 to 100 ETH | 5.25% |
| Ethereum (ETH Tier 2) | > 100 to 1000 ETH | 2.00% |
| Ethereum (ETH Tier 3) | > 1,000 ETH and above | 0.50% |
| Litecoin (LTC) | > 0 | 6.50% |
| USD Coin (USDC) | > 0 | 8.60% |
| Gemini (GUSD) | > 0 | 8.60% |
| Paxos (PAX) | > 0 | 8.60% |
| PAX Gold (PAXG) | > 0 | 5.00% |
| Tether (USDT) | > 0 | 9.30% |
For people who trade or exchange digital assets throughout the month, interest rates vary by type, amount, and number of days. Deposit bitcoin on May 1 and convert it to ether on May 15. You’ll earn 14 days of bitcoin interest and 16 days of ether interest per month.
BlockFi works like a bank by lending your assets to institutions and corporations and paying you interest. BlockFi charges interest on loaned funds as a lender. Your account’s cryptocurrency is replaced with a promise to return it.
Staking
The BlockFi system is designed to encourage users to stake their cryptocurrencies in order to earn interest. This can be done by either holding the coins in a BlockFi Interest Account or by using the BlockFi Trading Platform.
In order to stake coins on the BlockFi Trading Platform, users must first deposit them into their account. Once the coins are deposited, they can be used to trade on the platform or to make investments.
Users who hold their coins in a BlockFi Interest Account will earn interest on their balance. The interest is paid out in the form of the cryptocurrency that is being staked.
The BlockFi system is designed to be easy to use and to provide a high level of security. Users can rest assured that their coins are safe and that they will be able to earn interest on their balances.
Volatility
The volatility of BlockFi is relatively low when compared to other cryptocurrencies. This is due to the fact that BlockFi is backed by real-world assets, which makes it less susceptible to the fluctuations of the cryptocurrency market.
Digital wallet options and security
Digital wallet options
With the recently-launched BlockFi Wallet, users can buy, sell, trade, and hold cryptocurrencies and stablecoins. You can also use the wallet to store the crypto rewards that you earn from your BlockFi Rewards Credit Card.
Just know that you won’t earn any interest for assets that are held inside the BlockFi Wallet. To earn interest, your tokens must be held inside a BlockFi Interest Account.
BlockFi’s Interest Account (BIA)
Please take note that “BlockFI Interest Account (BIA) are no longer offered to new clients who are U.S. Persons or persons located in the United States.”
It will not be possible for existing clients who are citizens of the United States or who have their primary residence in the United States to add new assets to their BIAs.
BIAs cannot be offered or sold in the U.S., to U.S. persons, for the account or benefit of a U.S. person, or in any other jurisdiction where doing so would be illegal.
The name of the account that allows you to earn interest is the BlockFi Interest Account. You have the opportunity to earn interest in the cryptocurrencies BTC, ETH, LTC, USDC, GUSD, and PAX. There is no requirement for a minimum balance.
This account is not available to anyone residing in the United States of America and is provided by BlockFi International, a subsidiary of BlockFi (Bermuda).
Security
For an additional layer of security, BlockFi users can activate two-factor authentication (2FA) with the help of the Google Authenticator app.
In addition, Allowlisting is available on BlockFi as a self-service add-on. This protocol restricts the transfer of your cryptocurrency to only predetermined recipients. Withdrawals can be disabled entirely or limited to a whitelist of verified email addresses.
In addition, BlockFi uses analytics in the background to keep tabs on client transactions and score their potential risk. Even with 2FA and Allowlisting in place, withdrawals may still require a PII (personally identifiable information) verification.
Trading Fee
With BlockFi, the first withdrawal of the month is always free, but subsequent withdrawals may incur higher-than-average fees, depending on the coin and the amount invested. The following are some of the withdrawal fees that may be incurred when using BlockFi.
| Action | BlockFi Fee |
| BTC withdrawal | 0.00025 BTC |
| ETH withdrawal | 0.0135 ETH |
| GUSD, USDC, BUSD, PAX, DAI, USDT withdrawal | $25 |
Customer Service
Live chat with a customer service representative is available from 9:00 a.m. to 8:00 p.m. (EST), and phone support is offered from 9:30 a.m. to 8:00 p.m., Monday through Friday (EST).
In the BlockFi help center, help topics are organized according to product categories, making it simple to locate comprehensive responses to any questions you might have. In addition to that, there is a search function available for more specific questions.
BlockFi Live is a channel that the company maintains on YouTube. There is a wide variety of content available, including crypto videos of general interest, interviews, and platform tutorials on how to use them.
Friend-referrals
Referring friends to BlockFi earns bonuses. Share your referral code to earn $10 in bitcoin for every $100 deposit. After five referrals, you’ll get $20 in bitcoin per person. Even if your referral bonus increases, each new referee will get $10 in bitcoin.
Account Management
Customers of BlockFi have the option of managing their accounts through either a web-based portal or a mobile app.
When you log in, you will be presented with a summary of the details of your account.
You can set up, close your BlockFi Account, or set up a business/corporate account, also change your BlockFi account’s name, mailing address, phone number, and email address from the web interface.
The amount of interest that was paid on your holdings as well as the balance that you currently have in your account will be detailed. You will also have the ability to access tabs for various actions, such as making trades or requesting a loan, among other possibilities.
Customer Satisfaction
BlockFi gets an average of 4.0 out of 5 stars from over 200 user reviews on Trustpilot. Many customers have said they are happy with their experience with BlockFi.
From the reviews on Trustpilot, there are a few common worries. Some users said it was hard to get in touch with customer service when they had urgent problems.
Others said that the fees for withdrawing money were more than they expected.
Even though both of these things are worrying, BlockFi users give it high marks overall.
How to use BlockFi: A beginner’s guide
How to open a BlockFi account?
Everything Necessary to Begin
- Identification number assigned by the Social Security Administration
- Trustworthy contact number (this is used for SMS verification)
- Valid government ID (see acceptable forms of ID below)
- Selfie taken in real time (best taken with a smart phone rather than a webcam)
- Have reached the age of majority (18)
- You must be at least 18 years old.
When and how to sign up
To sign up for BlockFi, visit the website of BlockFi on any computer’s web browser, or get the app on any iOS or Android device and launch it.
Step 1: Create your account
Choose to begin by clicking or tapping the Get started button.
The next few questions will require the following data from you. As a precaution, please enter only current, accurate information.
- Name given at birth
- Authentic surname
- Electronic mail (use one that you have access to)
- Make up a passphrase (write this down and store in a secure place)
- Code given to you by a friend when you signed up (leave blank if you didn’t receive a code).
Please review our Privacy Statement, Terms of Service for Interest Accounts, and Terms of Service.
To indicate your agreement, please check the boxes and then click the “Submit” button.
A confirmation email from BlockFi will be sent to the address you provided during signup.
Step 2: Confirm your email address
Follow the instructions in the BlockFi email and either click the link or copy the URL. Support@blockfi.com, the company behind BlockFi, is sending you this message.
If you follow the email’s link, you’ll arrive at app.blockfi.com.
To finalize the email verification process, log back into your BlockFi account using the email and password you just entered.
Step 3: It is imperative that you triple-check your personal data.
In order to verify customers’ identities and ensure their eligibility to use BlockFi’s services, the company must collect certain information from them.
When creating an account, please specify whether it is for personal use or for a company. To continue, please enter your phone number where prompted.
- Simply type in your address and press the next button to proceed. Later in the signup process, you’ll be asked to provide a valid government ID, so the address you provide must match the one on that ID.
- To proceed, please enter your phone number, including the country code.
Individual accounts:
US Users:
- Please enter your US birth date and click the “Continue” button.
- To proceed, please select your primary funding source for cryptocurrency investments.
- Type in your SSN and hit the next button.
- To ensure your eligibility to use BlockFi products, the company will conduct a background check. This data collection is necessary to comply with “know your customer” regulations imposed by the federal government.
The next steps will be communicated to you via email.
International Users:
- Please enter your date of birth and click “Continue” if you are an international user.
- To proceed, please select your primary funding source for cryptocurrency investments.
- Once you’ve chosen the country that your official ID is from, you’ll be able to move forward.
- Pick the appropriate document to upload (driver’s license, national ID, or passport).
Take pictures of both sides of your ID using your phone’s camera. For guidance on how to upload documents correctly, see below.
Put your smartphone’s camera to good use and snap a photo of yourself. How to take a professional-looking selfie? Check out these suggestions for an astounding selfie!
Just hit the finish button.
The company will conduct a background check to ensure your eligibility to use BlockFi products.
This data collection is necessary to comply with “know your customer” regulations imposed by the federal government.
If you are a business user, please enter your company name below and click the “Continue” button.
Click the button labeled “Continue” after choosing the appropriate business sector.
Choose an appropriate business category and press the next button.
Put in your tax identification number.
Please provide the first name(s), last name(s), and email address(es) of the company’s owners before proceeding.
To ensure your eligibility to use BlockFi products, the company will conduct a background check. This data collection is necessary to comply with “know your customer” regulations imposed by the federal government.
It may take up to 5 business days for this to be completed. The next steps will be communicated to you via email.
Put money in your account.
You can deposit funds into your BlockFi Interest Account either by transferring cryptocurrency from another wallet or by linking a bank account.
When you link an external bank account to your BlockFi Interest Account, Gemini dollars (GUSD) are transferred there automatically so you can invest in them and earn an annual percentage yield (APY) of X.
You could invest in a cryptocurrency that best suits your needs, or you could use the money to buy something else. To learn more about the currencies accepted by BlockFi, click here.
How to buy and sell cryptocurrencies on BlockFi?
- Click on “Trade” on your Dashboard.
- Select ‘Receive’: GUSD
- Choose “Pay With”: Bitcoin
- Enter the amount of GUSD you want to use to buy BTC.
- Click the icon to switch (this will calculate the exact BTC you will receive based on current market prices)
- To move on, click “Confirm Trade.”
- Click ‘Submit Trade’
- Then, you’ll have made a trade to buy BTC with your GUSD (you will receive a confirmation email of the transaction)
Please note that the same steps apply if you want to use GUSD to buy another cryptocurrency, like Ether. If you want to buy Gemini Dollars (GUSD) with U.S. dollars (USD) and move them to BlockFi so you can start trading with them, here’s what you need to know.
Trading Experience
BlockFi has a dashboard online and apps for Android and iOS phones. Overall, trading on BlockFi is easy to understand and not too hard to do.
On desktop, users who wanted to make a simple trade would go to the table at the top of their screen and choose which assets they wanted to trade.
Users who have a BlockFi Interest Account can also set up trades that happen on a regular basis.
You can set trades to happen every day, every week, or on the 1st or 15th of the month. BlockFi stands out from its competitors because it lets you make trades over and over again.
Overall, trading is easy for people who are already familiar with financial apps or an online brokerage account.
FAQs
Is BlockFi right for you?
You should consider using BlockFi if you:
- If you want to invest in some of the biggest cryptocurrencies
- You want to use your cryptocurrency as collateral for a loan.
- You don’t live in the U.S., but you want to earn interest on your crypto holdings.
Is BlockFi Exchange safe?
In comparison to a traditional bank, BlockFi does not provide the same level of security for your money. Neither BlockFi nor its trustee, Gemini, are covered by the FDIC or the Securities Investor Protection Corporation.
But rest assured, your money is safe with Gemini because they take security seriously. The majority of the money will be stored in a secure location (i.e., offline).
As an added security measure, BlockFi claims that customer funds are prioritized over equity and employee funds in the event of a loss.
Gemini is a licensed depository trust based out of New York and supervised by the New York State Department of Financial Services (NYSDFS). SOC 2 Type 1 compliance is another area in which Gemini excels.
What cryptocurrencies does BlockFi support?
BlockFi can help beginners buy Bitcoin. You can buy, sell, or exchange a limited number of cryptocurrencies on BlockFi.
BlockFi supports Bitcoin, Binance, Ethereum, Gemini, Chainlink, Litecoin, Paxos, PAX Gold, Tether, and USD Coin (USDC)
Due to its limited offering, you won’t find Dogecoin (DOGE), Cardano (ADA), Stellar (XLM), and Polkadot (DOT). Stablecoins are backed by a reserve asset, such as the U.S. dollar or gold, while many cryptocurrencies are not.
What happens if I lose my BlockFi account information?
If you lose your BlockFi account information, you will not be able to access your account or funds.
Conclusion
One of the main problems that BlockFi is facing as of currently is the lack of transparency for customers on some of their services.
BlockFi’s policy may be to confuse users about the specifics of security measures or interest rates in their regions.
But, BlockFi does have some innovative ideas and offerings when compared to competitors – however it would be advantageous for their customers to spend more time offering details to customers in order to clarify the ways (and what) these features are beneficial to the users.
