Crypto manager and loans company BlockFi has begun offering the public a new interest-bearing deposit account similar to traditional bank accounts – except this one is for cryptocurrency deposits of Bitcoin (BTC) and Ethereum (ETH).
It announced (Mar 4) that its BlockFi Interest Account (BIA) will earn depositors a whopping 6% annual interest payable on a monthly basis in crypto. With interest compounding monthly, this works out to an annual percentage yield (APY) of 6.2% which BlockFi claims is “industry leading”.
Bank account interest rates in the US and many other markets in the world, by stark comparison, have been next to zero for at least a decade since the last major financial crisis.
BlockFi’s BIA account is open to the public worldwide, except for users located in sanctioned or watchlist countries, and in certain US states including New York, Connecticut, and Washington.
BIA requires a minimum deposit of 1 BTC or 25 ETH to be eligible to earn interest, and depositors may make withdrawals whenever they wish. Withdrawals are often pushed through on the same day, but BlockFi reserves the right to take up to 7 days to process a withdrawal. On its website, BlockFi said these terms “will change and improve as the Interest Account product grows and customer feedback is received”.
Perhaps to reassure investors that it has the ability to honor deposits and interest payouts, BlockFi revealed in its announcement that BIA has been in private trial since the beginning of this year, and claims to already hold over $10 million in assets from retail, corporate, and institutional crypto clients.
Account holdings are custodied with the Gemini Trust Company – a New York-based trust company regulated by the New York State Department of Financial Services. It recently announced an offering of digital asset insurance coverage and the completion of its SOC 2 Type 1 security compliance review of its exchange and custodian platform.
Tweeting about the launch of BIA, BlockFi CEO Zac Prince said: “Lending and borrowing is readily available at the institutional level, and we’re excited to leverage our relationships and capital markets expertise to provide utility and yield on digital assets for all crypto investors.”
BlockFi received a $52.5 million injection from Galaxy Digital for its business just in June last year.