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Crypto Lending Startup BlockFi Launches Gemini Dollar Accounts

Cryptocurrency asset management company BlockFi announced that it has opened interest-bearing accounts for the gemini dollar.

Cryptocurrency asset management company BlockFi announced that its interest-bearing accounts now support the gemini dollar (GUSD) in a post published on May 29.

Per the announcement, GUSD deposits will see a yearly yield of 6.2%, paid in the stablecoin in question. BlockFi notes that it also offers GUSD as a U.S. dollar funding option and as collateral from institutional cryptocurrency borrowers. BlockFi CEO Zac Prince commented:

“The implication of adding this functionality is that you could see crypto companies like BlockFi compete with traditional fintech challenger banks by taking advantage of assets like Bitcoin for on-ramps in to a dollar-based blockchain financial ecosystem.”

BlockFi notes that the accounts will not be available to United States-based customers due to a lack of regulatory clarity surrounding stablecoins backed by fiat currency. The firm states that it is working with legal counsel to add support for U.S. clients later this year.

Some in the cryptocurrency industry have criticized BlockFi, as its terms and conditions allow it to determine the interest rate each month at its sole discretion. David Silver of Silver Miller Law firm said the firm does not advertise what it guarantees, which could be confusing for users.

In March, BlockFi decreased the interest rates for its top tier bitcoin and ether accounts. In May, the lending platform further lowered interest rates for some of tis ether accounts as the lending environment for ether had purportedly floundered.  

Earlier this month, Korea’s oldest bank, Shinhan Bank, launched a blockchain-enabled lending platform to speed up the loan process.

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BlockFi Slashes Ethereum (ETH) Interest Rate, Bumps BTC

Ethereum ETH Bitcoin BTC Blockfi 2019

Cryptocurrency lending firm BlockFi has announced an update to their interest rates for Bitcoin and Ethereum, with the latter experiencing a severe cutback.

According to the monthly update published on May 21, BlockFi reports that the month has been “fantastic” for the crypto ecosystem, and predicts the bear cycle is likely reaching its end. The company highlights the thousands of fans, traders and entrepreneurs who attended the 2019 Blockchain Week held in New York City as a testament to the industry’s growth. In addition, BlockFi reports that that their interest account now commands over $100 million in digital assets being managed, marking a substantial milestone for the financial product since its launch earlier this year.

BlockFi.com

Last week BlockFi published an article outlining the market forces driving their ability to lend cryptocurrency and the metrics they use for generating interest rate returns. Citing that guideline, the lending company reports that the demand for Bitcoin borrowing and lending has been on the rise, describing it as a “vibrant and growing field.” However, BlockFi claims that interest in Ethereum, in terms of the market for loaning ETH, has been lackluster in comparison and points to other cryptocurrency lending platforms who have drastically scaled back on the market for Ether,

“Ether lending market over the last couple quarters has become as stagnant as we’ve ever seen it. According to the Q1 report put out by Genesis Capital last month, just 3% of their overall loan portfolio is in ETH. Additionally, platforms like Poloniex and Compound are offering borrowing rates on ETH as low at 0.01%.”

As a result of falling market demand in Ether borrowing, BlockFi has announced a slashing of the Ethereum interest rate, while providing a slight bump in BTC. According to the new guidelines found in the official post:

  • BTC Balances above 25 BTC will earn 2.15% interest (up from 2% previously). All balances between 0.5 BTC and 25 BTC will continue to earn 6.2% Annual Percentage Yield (APY)
  • ETH Deposits between 25 ETH and 100 ETH will change from 6.2% to 3.25% APY. Balances above 100 ETH will earn 0.2% APY

BlockFi’s announcement comes as a disappointing setback for Ethereum investors who were hoping to make secure and somewhat guaranteed annual returns on their coins. While the crypto markets throughout 2019 have produced 105 percent and 86 percent returns for Bitcoin and Ethereum, respectively, BlockFi provides an additional boost in ROI for investors not looking to cash their coins in any time soon. Instead, crypto investors are able to lend to would-be borrowers through BlockFi, as opposed to keeping their currency dormant in wallets or exchanges.

BlockFi’s monthly dispatch also reports updates coming to their dashboard in the next few days. Including the ability to view interest earned to date, total account balance in USD, and calculators forecasting potential earnings. BlockFi utilizes Gemini for its custodial services in storing and securing client cryptocurrency.

The post BlockFi Slashes Ethereum (ETH) Interest Rate, Bumps BTC appeared first on Ethereum World News.

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BlockFi Lowers Investment Threshold for Earning Bitcoin Interest

Blockfi Bitcoin Ethereum Interest

Bitcoin prices may be dropping, but one cryptocurrency-based lending startup is looking to expand the appeal of digital assets. BlockFi, which is backed by the Winklevoss Twins’ cryptocurrency conglomeration Gemini, has agreed to lower the BTC investment threshold for participating in its interest generating program.

Last month, BlockFi announced the creation of the world’s first interest-bearing accounts for Bitcoin and Ethereum. The New York-based firm will be paying out 6.2% in interest on deposits of Bitcoin and Ethereum, all backed by the Winklevoss twins’ Gemini cryptocurrency exchange.

However, after extensive community feedback, the lending startup made the decision to lower the minimum amount of BTC required to receive the full interest reimbursement to 0.5 BTC, which will be applied retroactively to April 1st of this year. In an official blog post updated on April 23, BlockFi told users,

We are retroactively dropping the minimum required BTC balance to earn interest to 0.5 BTC. After launching BIA, a lot of users reached out to our team asking that we drop our minimum eligible balance to earn interest.

We’re excited to let our community know that BTC balances of 0.5 BTC and up will now begin earning interest on their deposits. And as an added bonus, we’re applying this retroactively as of April 1st.

That means if your BIA BTC balance was between 0.5 and 1 BTC in April, you’re eligible to receive  interest at the end of April. We expect to lower our minimum balance further in the near term.

BlockFi also reports receiving a surge in demand from Indian-based customers, and has added India to the list of 65 countries that it currently services with interest-bearing crypto accounts. BlockFi claims to hold $53 million in client-based cryptocurrency, and reports that it works with institutional counterparts on investing in order to offers users the competitive interest-rate of 6.2% APY.

Interestingly, the company reports capping Ethereum deposits eligible for the 6.2% in interest at 250 ETH, explaining that they have had a decline in demand for Ethereum borrowing over the last month. Because the company relies upon lending deposited cryptocurrency as a way of generating client-paid interest, it has to balance demand with the amount of coins coming in.

Compared to other models of generating profits from cryptocurrency, interest-bearing lending is proving to be an intriguing avenue. Numerous economists have come forth to discredit Bitcoin and cryptocurrency as a legitimate form of money, citing its high price volatility as a barrier for use in lending. BlockFi is trying to prove the opposite, and will give a revealing state of the industry over the next several years.

Interest-bearing accounts also provide a way for current cryptocurrency investors to generate profit while decreasing their risk. Compared to speculating on the open market, BlockFi provides a guaranteed rate of return. For long-time holders, it also provides an avenue that puts accumulated coins to use in lending to other clients, while also generating a profits comparable with the yearly S&P Index returns.

Staking for Proof of Stake cryptocurrencies, such as the algorithm Ethereum is working to integrate over next eighteen months, could lead to even more adoption for interest-bearing accounts, if BlockFi and the like can continue to offer competitive rates.

The post BlockFi Lowers Investment Threshold for Earning Bitcoin Interest appeared first on Ethereum World News.

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Bitcoin Investor Warns BlockFi’s 6.2% Account Could Suppress BTC

BlockFi To Pay 6.2% APR In Bitcoin And Ethereum 

Forbes reports that BlockFi, a company that raised $52.5 million from investors like Novogratz’s Galaxy Digital last July, has launched a game-changing product. BlockFi has reportedly given clients across the globe the ability to make up to 6.2% annual interest on Bitcoin (BTC) and Ethereum deposits. This “interest account” offering will go alongside BlockFi’s loan offering, which allows users to borrow more than $2,000 at a 4.5% interest rate if they deposit collateral denominated in three leading cryptocurrencies. In an announcement, Zac Prince of BlockFi explained:

“BlockFi is the first crypto challenger bank. Bitcoin and crypto lending, especially to retail investors, is a nascent market. It has though been pushed on by institutional interest over the last year or so.”

The Winklevoss Twins’ Gemini Trust will be backing the novel offering through custody, which has full insurance coverage.

Will It Depress BTC?

Although the premise of this venture makes sense, some are wary it could depress BTC over time. Industry commentator ObiWan touched on the subject matter in a recent Twitter thread. He noted that BlockFi rehypothecates the capital users deposit, which means the company reuses collateral to borrow cash, creating an environment that can be rife with trading of the rehypothecated asset, “inflating the asset value [a handful of times] with multiple claims and no backstop.”

Obi claims that Wall Street and “shadow banking entities” use such a strategy to create “paper claims” (derivatives) on pledged assets. While many argue that Bitcoin isn’t susceptible to such a happenstance, as it is the hardest money (Saifedean Ammous) in existence by Austrian Economics standards. But the introduction of BlockFi’s deposit account could turn the tables. Wall Street hotshot turned Bitcoin diehard Caitlin Long argues that BTC spot could be depressed by synthetic BTC, created through derivative products, as this would push the ‘supply’ of the cryptocurrency above 21 million.

He isn’t the only one who expects rehypothecation to curb the value of digital assets. Per previous reports from Ethereum World News, Su Zhu of Three Arrows Capital, hinted at the sentiment that the introduction of Ethereum futures could push the value of ETH lower.

Not Your Keys…

This isn’t the only controversy about the startup’s newfangled investment vehicle. Prominent Bitcoiner John Carvalho hinted at his thought process that lending your funds to BlockFi is totally going against ‘being your own bank’, before bashing a Twitter user who was ‘shilling’ the project through a referral link.

In the sub-tweets of his original quip, Carvalho noted that Peter McCormack, a podcaster hosted by BlockFi, was in the wrong for accepting a sponsorship with a questionable offering. Although McCormack defended his position, drawing a fine line between having a sponsor to keep the lights on and senselessly shilling, Carvalho was adamant that pushing such a product was irresponsible.

All this comes just weeks after the Proof of Keys event, headed by Trace Mayer, in which its proponents claimed that it was irresponsible to hold Bitcoin (and other cryptocurrencies for that matter) with third parties, even if they are trusted and respected by the community.

Photo by Joshua Earle on Unsplash

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