BlockFi – Alternative way to earn higher interest than bank rates?

Disclaimer: The information shared here is not financial advice. Please do your own due diligence before making any crypto-related investments.

What is BlockFi?

BlockFi is a cryptocurrency financial services company offering financial products to retail and institutional investors. The company was founded in 2017, and is domiciled and regulated in the U.S. It is backed by notable investment partners such as Coinbase, Winklevoss Capital, SoFi. BlockFi provides interest-bearing cryptocurrency account (BlockFi Interest Account or BIA), consumer cryptocurrency loans and also crypto trading services.

BlockFi Interest Account (BIA)

So what is BlockFi Interest Account? BlockFi Interest Account allows HODLers to earn interest on the crypto assets that is deposited with BlockFi. At the moment, BIA supports the deposit of BTC, ETH, LTC, LINK, PAXG and stablecoins (USDT, USDC, BUSD and GUSD). The interest rates are considered quite competitive, with Annual Percentage Yield (APY) of up to 9.3% for USDT.

APY for cryptocurrencies supported by BlockFi

The cryptocurrencies deposited are held by Gemini (one of the leading cryptocurrency exchanges) as the custodian. Gemini is a licensed custodian and regulated by the New York State Department of Financial Services (NYDFS). Gemini keeps 95% of its assets in cold storage and 5% in hot wallets. In addition, Gemini also has its own insurance for its deposit. You can refer here for more detailed information on how BlockFi securely stores the crypto assets. There’s also a very detailed review from Coincentral on BlockFi, so i suggest you could read more from there.

Earn Interest from Stablecoins

One possible strategy to maximise interest, given the dismay interest rates offered by banks, is to deposit stablecoins into BlockFi, to earn compounded interest of 8.6%/9.3% annually. The good thing about stablecoins is that it is not subjected to price fluctuations like BTC, LTC etc. Stablecoins are pegged to the US dollar, meaning that one USDC/BUSD/GUSD is equivalent to one US dollar.

Instead of transferring stablecoins into BlockFi, you can deposit USD into BlockFi and it will be automatically converted to GUSD equivalent, and you can start to earn interest. The accrued interest is paid out monthly. Do note that BIA is not FDIC insured, meaning the funds/crypto u deposited into it are not guaranteed by the US Govt. If BlockFi goes down, you may lose all of the crypto/funds u deposited.

Withdrawal limit and fees

BlockFi offers 1 free crypto withdrawal and 1 free stablecoin withdrawal per month. After which, it will start to charge withdrawal fees. This free withdrawal is good especially when you need to transfer out some crypto/stablecoin for some other purposes.

Limited 10% APY Stablecoin Promotion

There is currently a promotion of 10% APY for all additional stablecoins (excluding USDT) deposited into BIA, from 22 April to 31 July 2021. Any new stablecoins deposited during this period will be earning 10% APY instead of the usual 8.6%.

How to Sign Up for BlockFi

If you are interested to join BlockFi despite the risks mentioned, you can consider using my referral link.

If you sign up using my referral and deposit $100 or more into your BlockFi Interest Account (BIA), we will each earn $10 in BTC.

Author: Ci2fi

Average salaried man exploring the ways towards financial independence.

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