Earn Interest with BlockFi
High yield savings accounts (HYSA) are very popular for the amount of interest you can earn. In particular, for money that is sitting in an account and on short notice, liquidated. Such as an emergency fund or savings account. Yet, those interest rates have decreased due to the fed cutting rates. Where once your money earned 3%-4% interest, now you can only earn 2% if you’re fortunate.
Luckily, cryptocurrency services are offering up to 8.6% interest on your savings. One of those crypto services is BlockFi and you can earn massive interest by holding your crypto with them.
BlockFi is a cryptocurrency lending startup backed by the Winklevoss twins’ Gemini exchange and custodian services. When you create an account and deposit your crypto, your assets are securely stored on a unique wallet address generated by Gemini.
Gemini is a New York trust company licensed by the New York State Department of Financial Services. They are a fiduciary under §100 of the New York Banking Law and held to capital reserve requirements and compliance standards. Also, they have digital asset insurance coverage and SOC 2 Type 1 security compliance.
BlockFi Interest Account
The BlockFi Interest Account (BIA) is an interest-bearing account, which provides market-leading yields to crypto investors. But, limited to Bitcoin, Ether, and Gemini Dollar (GUSD) on their platform.
At launch, BlockFi limited their services by requiring asset minimums. Yet, as of September 13, 2019, they have eliminated the minimums and reduced the fees. Now anyone can store their crypto without meeting minimums and earn interest as high as 8.6% APY.
The interest earned in your BIA is paid at the beginning of every month. Also, it’s compounded. Account-holders can access their history of payments and the total balance on their BlockFi dashboard. Interest is paid in the client’s deposited currency, meaning Bitcoin will earn Bitcoin and Ether will earn Ether.
The ability to earn interest compounded monthly is a great way to build wealth exponentially over time.
What’s the catch?
I know you’re wondering how can a crypto service afford to pay 8.6% when banks can afford 2%? BlockFi was originally developed as a crypto loan provider and has since, expanded its services. One of them being interest accounts.
BlockFi generates yield by originating crypto loans to their consumer and institutional clients. They have been lending to consumers and businesses around the world since January 2018. According to their CEO, “they have never had a loss of funds from any of their loan customers.”
Another way they can afford higher rates is through limits and fees. In particular, withdrawing your crypto funds. This is to prevent customers from liquidating their funds that would be otherwise loaned out to clients. All BIA clients are entitled to one free withdrawal for one currency per month. For each subsequent withdrawal request within that month, applicable withdrawal fees apply.
Pros and Cons
Here is a snapshot of the pros and cons of using BlockFi to earn interest.
- Compounding Interest
- No Early Penalty
- One Free Withdrawal per Month
- No Minimum Requirement to Earn Interest
- More Consistent Earnings
- Earn In-Kind or Payment Flex
- Monthly Payouts
- Monthly Statements
- No Utility Tokens Required
- Gemini Custodian Services
- Responsive Support
- High Fees if withdrawing more then once per month
- BTC Lower Tier Interest Rate
- ETH Lower Tier Interest Rate
- Limited Asset Options
- Withdrawal Minimums
- Withdrawal Time
- Web Only
- Lack of Community
I hope you found this article informative if you’re a crypto holder or plan to diversify into cryptocurrencies. It has been depressing watching my high yield savings account interest rates cut due to the fed cuts, but now I have more options. This is why diversification is important and can offset underperforming assets.
I’ve invested in cryptocurrencies since 2012 and hoped to find a custodian that offered interest accounts. BlockFi offers that service that has been long needed in the crypto infrastructure. I plan to hold my crypto long term, so any interest gained is a win-win and will only increase my wealth. Here’s to happy HODLERS!