BlockFi investing review: Trading with no fees or account minimums
How does BlockFi compare?
BlockFi, Coinbase, and Abra all offer several crypto services for individual and institutional clients. The three mainly differ when it comes to fees, account offerings, and cryptocurrencies.
For instance, Coinbase and Abra have higher minimum requirements ($2 and $5, respectively), but both give you access to a larger selection of crypto assets. Coinbase offers more than 50 crypto assets, and Abra offers more than 100.
However, BlockFi and Abra share some similarities when it comes to fees and account types. Both have lower crypto transaction fees, and both offer crypto-backed loans that let you use your assets as collateral.
Keep reading to see if BlockFi is right for you.
Ways to invest with BlockFi
You don't need to meet a minimum account size to start trading crypto assets at BlockFi. Plus, trading is generally fee-free (excluding a small spread fee on transactions).
BlockFi's cryptocurrency selection includes bitcoin, ethereum, litecoin, and pax gold. It also offers several US dollar-based stablecoins, including US dollar stablecoin (USDC), tether (USDT), gemini dollar (GUSD), and paxos standard (PAX).
While its trading services are best for self-directed, or hands-on, traders, you can also utilize its recurring trades feature to automate your crypto trades on a schedule you choose. Learn more here.
BlockFi is also introducing a rewards credit card that lets investors earn 1.5% cashback in bitcoin on purchases. You can join the waitlist here.
You can earn up to 7.5% in interest simply by storing certain crypto assets with BlockFi. The account pays you monthly compounding interest, and BlockFi distributes these payments on the first business day of each month.
Note, though, that the APY you receive depends both on the cryptocurrency and the size of your account balance in that particular asset. This is because BlockFi uses a tiered fee structure. For instance, see the following bitcoin and ethereum rates:
- Bitcoin tier 1: 4% APY for 0 - 0.25 bitcoin balance
- Bitcoin tier 2: 1.5% APY for 0.25 - 5 bitcoin balance
- Bitcoin tier 3: 0.25% APY for > 5 bitcoin balance
- Ethereum tier 1: 4% APY for 0 - 5 ethereum balance
- Ethereum tier 2: 1.5% APY for 5 - 50 ethereum balance
- Ethereum tier 3: 0.25% APY for > 50 ethereum balance
You'll also have to pay fees for withdrawals from your interest account. You can find more information on BlockFi's interest rates here.
If you were to encounter a personal emergency where you needed cash, you might consider selling some of your crypto assets. BlockFi's crypto-backed loans, however, let you borrow against your cryptocurrencies without selling them.
Interest rates are as low as 4.5%, and the loans include three notable perks:
- Same-day funding: BlockFi says it funds you the same day you sign up for the loan and offer crypto collateral
- Penalty-free prepayment: This means you can pay off your loan as soon as you want without any penalties
- Flexibility: You can borrow up to 50% of the value of your assets, with the option to invest in other cryptocurrencies
Here's how it works: You give BlockFi your crypto assets as collateral (acceptable assets include bitcoin, ethereum, and litecoin), and it gives you a loan in USD, gemini dollar (GUSD) stablecoin, or US dollar (USDC) stablecoin. Learn more here.
BlockFi offers several services for investment funds, market makers, businesses, and other institutional clients. These include financing (loans in cryptocurrencies, stablecoins, and US dollars), over-the-counter (OTC) trading with 24/7 support, corporate treasury solutions, and trust investments in bitcoin, ethereum, and litecoin.
You can utilize these services through the BlockFi Prime institutional trading platform. Learn more here.
Is BlockFi trustworthy?
BlockFi currently has an F rating with the Better Business Bureau. BBB ratings range from A+ to F, so this is the lowest rating a company can receive in customer trustworthiness.
Besides noting BlockFi's length of time in business, the bureau cites a couple reasons for its rating. For one, BlockFi received three complaints, and BlockFi also failed to respond to the three complaints filed against them. Other factors the BBB commonly reports on include type of business, customer complaint history, government actions, and advertising issues.
The New Jersey Bureau of Securities also recently issued a Cease and Desist order that bars BlockFi from offering its interest-bearing crypto accounts to new clients. The order claims that the crypto securities offered for BlockFi's interest accounts aren't registered with the bureau.
While the New Jersey Ban is scheduled to take effect on July 29, Texas and Alabama are also accusing the platform of failing to register its interest accounts.
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