- BlockFi has teamed up with Silvergate to introduce inbound wire transfers to its service.
- CEO and Co-Founder Zac Prince explains how BlockFi is able to offer high interest rates.
- Despite the market crash, Prince says he remains bullish on crypto's future.
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Cryptocurrency lending and borrowing service BlockFi announced today support for domestic and international inbound wire transfers. According to the company, this allows the Winklevoss Capital-backed service to boost liquidity in volatile crypto markets. In addition, BlockFi partnered with the Silvergate Exchange Network (SEN) to process the wire transfers.
“With our new support for cash and wire transfers, individuals have an even lower barrier of entry for beginning their digital asset investments,” BlockFi CEO and Co-Founder Zac Prince told Decrypt. “We feel strongly that easy-to-use, flexible financial tools are what will mature the crypto space and allow it to expand,” he said.
In a statement, Prince explained that earning 8.6% on stablecoin deposits “in an increasingly low-yield and volatile market” is what makes his firm stand out. And now adding a fiat on-ramp to its service “will facilitate increased liquidity on BlockFi's platform, which flows through and improves liquidity in the broader crypto ecosystem,” he said.
BlockFi caused a stir last year when the firm first launched its interest-earning account product that advertised annual returns of over 6%, much higher than traditional banking’s average savings rates of less than 1%, according to the Federal Deposit Insurance Corporation. The company’s fine print, however, makes clear that its product is not a checking or savings account, and that rates are subject to change on a month by month basis at their discretion.
As for how BlockFi is able to offer such high rates, Prince told Decrypt that the company is “able to leverage our lending margins to pay interest on the BlockFi Interest Account (BIA), and the BIA enables the liquidity to make lending a reality,” referring to their first product: crypto backed loans.
“Dollar borrowing rates in the crypto sector remain high because traditional sources of debt capital aren't available to the crypto market,” he said.
BlockFi’s latest announcement comes just weeks after the company raised $30 million in a Series B funding round that included investments from a who’s who of crypto. The firm has now raised over $100 million in total funding. The company also recently added support for cryptocurrencies and stablecoins like Litecoin and Circle’s USDC, and launched a trading service late last year.
In light of recent turmoil that saw crypto and traditional equities markets suffer, Prince said he remains confident that crypto markets can weather the storm. “We’re seeing the global economy and the crypto markets react to an international health crisis on a scale we haven’t seen in recent history,” he said.
“However, crypto markets have remained bullish in recent years and we’ve seen lending and interest account demand continue to grow rapidly. When markets are down, there’s an opportunity to buy in low and make the most of the assets you already own, which can be done through interest accounts, meaning BlockFi is quite resilient to these market changes,” he said.
Said Prince: “We made our first loan in January of 2018, so we are familiar with managing volatility and continue to remain bullish overall on the crypto market.”