BlockFi, New Jersey-based provider crypto-backed lending products, is making changes to the interest paid based on the yield it generates from lending Bitcoin (BTC) and Ether (ETH), effective April 1.
BlockFi’s new yields for those lending up to 5 BTC will be 6.0 percent. Right now, “Tier 1” customers loaning up to this amount see a yield of 3.6 percent. Likewise, ETH lenders will experience a rate increase to 4.5 percent on loans of up to 500 ETH from 2%-3.6% APY currently.
Rates for Gemini dollar (GUSD) and USD Coin (USDC) will remain unchanged at 8.6 percent APY, according to BlockFi.
The Winklevoss twins-backed digital currency platform initially launched its bitcoin and ether accounts a year ago, with starting interest rates at 6% APY for both cryptocurrencies. BlockFi initially allowed users to exchange its three legacy assets in Bitcoin, Ether, and GUSD., then added support for USDC and Litecoin this year.
In an email to customers, Zac Prince, CEO, BlockFi, said:
“Last Thursday (3/12) evening Eastern Time, there were particularly violent downward price movements in the cryptocurrency market resulting in very limited liquidity. This was handled strategically by our team and risk management system and we did not liquidate USD loan client collateral below a price of ~$4,500, despite the market reaching lows of ~$3,800. As a result of the team’s prudent actions during this period, our clients’ capital was saved and we also liquidated a smaller percentage (<10%) of our overall USD loan book vs. other market participants.”
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Prince added that the new interest rate adjustments introduced by BlockFi reflect a stronger balance sheet and shifts in the institutional lending markets that have created opportunities to expand their margins.
A new funding round to fuel growth
BlockFi has raised $30 million last month in Series B funding led by Valar Ventures, with participation from a host of other investors. It had previously raised nearly $60 million in various funding rounds since 2018.
On a more recent note, on March 10, BlockFi announced it now allows crypto-curious folks to send bank wires to buy crypto assets and earn up to 8.6 percent per annum on stablecoin deposits in their interest-earning accounts. The new feature is provided in partnership with Silvergate Bank, a crypto-friendly lender, in another sign that crypto-focused banking space is maturing.
BlockFi has also become the first in crypto to be eligible to offer interest-bearing accounts for Florida state residents after it obtained a money services business license.