Crypto Lender BlockFi Boosts Interest Rates Days After Securing $250M Loan from FTX
Leading cryptocurrency lending firm BlockFi has increased its interest rates on deposits three days after securing a $250 million credit facility from crypto exchange FTX.
The crypto lender also noted that it would no longer allow one free withdrawal monthly. However, the firm said it lowered the withdrawal fees on some crypto assets.
Announcing the new rates today, BlockFi said the new policy would take effect on July 1, adding that the new rate applies to seven crypto assets supported on the platform across all account tiers.
“On Friday, July 1, 2022, we’re increasing our rates for BTC, ETH, USDC, GUSD, PAX, BUSD, and USDT across all tiers in the BlockFi Interest Account (BIA), with Tier 2 and 3 rate increases the most substantial. All tier amounts remain the same,” the company said.
According to BlockFi, the decision to boost its deposit yields stems from three key reasons — effective risk management, decreasing market competition, and a changing macro yield environment.
BlockFi said it managed its risk by not following in the footsteps of other firms that increased interest rates for retail users during the bull market. As a result, it can offer customers boosted yields in the current bear market.
On declining market competition, the firm noted that while its competitors have paused or slowed down their operations due to the recent market volatility, BlockFi has maintained “100% uptime” of its retail and institutional platform.
Lastly, BlockFi said the dramatic rise in U.S. Treasury yields over the past several months has allowed the firm to boost deposit rates for its retail clients.
The new policy comes a few days after the lending firm secured a $250 million credit facility from Sam Bankman-Fried’s FTX to boost its balance sheet and strengthen its position in the market.
BlockFi’s co-founder and CEO Prince Zac said the term sheet agreement with the crypto exchange was “equal parts an offensive and defensive move.”
Meanwhile, The Wall Street Journal reported today that FTX is in talks to acquire a part of BlockFi, and both firms are currently negotiating the terms of the deal.
~Written by William A. Frederick~
