BlockFi News

Earning Your Trust Through All Market Conditions

Published, 12 July, 2022

Over the past five years, we’ve been battle-tested through all types of market conditions.

We’ve always believed risk management is paramount to our success. It's the reason you, our valued clients, have and continue to have full access to your funds in any market environment.

While fear, uncertainty, and doubt remain high, we continue to be fully operational and are navigating through this period of market volatility with our team of experienced crypto and traditional finance veterans from top-tier firms.

At BlockFi, one of our core pillars is “Transparency Builds Trust.”

This means we don’t hide anything behind a curtain—with BlockFi, what you see is what you get. With this principle in mind, below you’ll find an update on our operations during this period of high volatility.

Effective risk management

We’ve always operated with a prudent and proactive risk management approach:

We’ve processed 100% of retail client withdrawal requests within or ahead of the service level agreements in our terms of service.
We keep a sizable amount of collateral on hand (at least 10% of client funds) so you can easily withdraw, and 50% are held in short-term positions (seven days or less).
We’ve maintained a positive Net Interest Margin (NIM) since September 2021—meaning we generate more interest income from borrowers (institutions) than we pay out to retail clients (you).
We don’t have a centralized utility token that can be opaque and manipulated.
We don’t engage in speculative bets into DeFi protocols—for instance, we’ve never held any principal positions in UST / Anchor or stETH.
We have no exposure to Celsius and we’ve never partnered with them.
We were among the first to de-risk our credit and market risk exposure, as described here and here. No client funds were impacted.
We have strict KYC and compliance standards, and we’re partnering with the appropriate authorities for sensible industry regulation, both in the US and globally. Just check our Licenses & Disclosures.

The performance of our loan portfolio, which is published and updated quarterly, allows us to continue lending and borrowing even as we incorporate additional risk criteria during this period of volatility.

Increasing BIA rates

Over the past few months, we’ve generally maintained flat or decreasing rates in line with our overall treasury and risk management strategy. However, we’ve recently seen an uptick in demand from institutional borrowers at higher rates, similar to rate moves in traditional markets, such as the US Treasury yields. This rise in institutional demand allows us to pay out more to you, our clients.

BlockFi Lending Yields on Top Cryptoassets

As always, we share as much of this yield with you as possible. That’s why, starting Friday, July 1, we increased our rates for BTC, ETH, USDC, GUSD, PAX, BUSD, and USDT across all tiers in the BlockFi Interest Account (BIA).

Bitcoin (BTC) Updates [All clients]

Ethereum (ETH) Updates [All clients]

Stablecoin (USDC, GUSD, PAX, BUSD) Updates [US clients, BIAs held at BlockFi Inc.]

Stablecoin (USDC, GUSD, PAX, BUSD) Updates [Non-US clients, BIAs are held at BlockFi International.]

Stablecoins (USDC, GUSD, PAX, BUSD) Non-US

Tether (USDT)** Updates [Non-US clients, BIAs are held at BlockFi International.]

Built for the long haul

One of our top goals has been to achieve profitability so we can offer competitive yields through all market conditions. In fact, we were cash-flow positive in May 2022. Like many in the Tech industry, we’ve been impacted by the dramatic shift in macroeconomic conditions. Through it all, our platform has maintained full operability and our team’s been working diligently to answer all of your questions in real-time via Twitter, Reddit, and our Help Center.

We signed a landmark term agreement with FTX, who shares our values and commitment to clients. The agreement includes a $400 million revolving credit facility which is subordinate to all client funds and an option to acquire BlockFi at a variable price of up to $240 million based on performance triggers.

To date, BlockFi clients have received over $575 million in crypto interest, including $10+ million last month, and have never taken a loss of principal. We’ve updated crypto interest rates every month and processed all withdrawals within our terms and conditions.

We remain committed to serving you and ensuring all of your funds are safeguarded. Our products and systems continue to operate as normal.

We’re here for you

Our ambition and commitment remains the same: provide crypto-powered financial services that accelerate prosperity worldwide.

We take our responsibility to do right by you seriously. You make our mission possible, and we’re endlessly grateful and excited that you’re with us on the journey.

As always, our Client Services team is here to support you 24/7 with any questions you may have.

As far as what the future holds, as Zac Prince, CEO and Co-Founder, recently stated on Bloomberg:

“What I’m highly confident in is that at some point in the future—it might be six months or 18 months—we’re going to look back at some point in time over the next few months and we’ll say, ‘That was a phenomenal time to buy.’ And the reason that’s going to happen is because there’s so much long-term growth still ahead for this asset class.”

- The BlockFi team

Dig deeper:

Listen: Zac Prince (BlockFi) on Navigating Through the Storm (On The Brink)

Read: BlockFi CEO Prince on Credit Pact With FTX, Crypto Plunge: Q&A (Bloomberg) and Zac Prince's market volatility Twitter thread below:

— BlockFi (@BlockFi)

Research: Blockworks

Last updated on July 14th, 2022

As of February 14, 2022, the BlockFi Interest Account (BIA) is no longer available to new clients who are US persons or persons located in the US and existing US clients with BIA accounts are unable to transfer new assets to their BIAs. Learn More.

BlockFi Lending LLC NMLS ID#1737520 | NMLS Consumer Access

BlockFi Trading LLC NMLS ID#1873137 | NMLS Consumer Access

Digital currency is not legal tender, is not backed by the government, and crypto accounts held with BlockFi are not subject to FDIC or SIPC protections. Digital currency values are not static and fluctuate due to market changes. Not all products and services are available in all geographic areas and are subject to applicable terms and conditions. Eligibility for particular products and services is subject to final determination by BlockFi. Rates for BlockFi products are subject to change.

BlockFi Rewards Credit Card: For more information, please see BlockFi’s Terms of Service. BlockFi is not a Bank. Cards are issued by Evolve Bank & Trust, Member FDIC, pursuant to a license from Visa® USA Inc. Rewards are not offered by Evolve Bank & Trust and are instead offered and managed by BlockFi.

BlockFi International Ltd. holds a Class F digital assets business license under the Digital Assets Business Act, 2018 (as amended) and is licensed by the Bermuda Monetary Authority to conduct the following digital assets business activities: (i) issuing, selling or redeeming virtual coins, tokens or any other form of digital assets (ii) operating as a digital asset exchange (iii) providing custodial wallet services (iv) operating as a digital asset derivative exchange provider and (v) operating as a digital assets services vendor.

See blockfi.com/terms for more information.