BlockFi Raises Interest Rates on Crypto Deposits Despite Market Downturn

Leading cryptocurrency lending platform BlockFi has disclosed plans to increase rates on selected crypto assets, including BTC, ETH, and USDC, in its Interest Account (BIA) starting July 1. 

“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,” BlockFi said. 

The crypto platform also noted that the interest rate hike aligns with its ongoing mission to provide substantial and long-term customer service while expanding its product offerings. 

Additionally, BlockFi highlighted that the rates are set based on the market trends for lending and borrowing assets, stating that all prices shown on its rate dashboard are current, and the new rates will be effective as stated. 

Low Institutional Demand 

The popular crypto lender stated that it was able to push the interest rates due to effective risk management, decreasing market competition, and the changing macro yield environment. 

BlockFi also said that rates on cryptocurrencies held in its BIA accounts are fundamentally driven by institutional demand for borrowing assets. 

The crypto company highlighted that it was among the first firms to de-risk its credit and market risk exposure at the start of the recent market crisis while still honoring withdrawal requests.

Meanwhile, the unfavorable market conditions forced the firm into slashing 20% of its workforce in an effort to reduce its expenditures. 

BlockFi Lowers Withdrawal Fees

Aside from the increased interest rates, BlockFi also disclosed that it is changing its withdrawal structure effective July 1 due to the high demand for withdrawals. 

The new structure will accommodate the current market downtrend, and users will be mandated to pay a maximum of $25 for transaction fees, depending on the asset. The company also plans to scrap the one-free monthly withdrawal for BTC, ETH, and stablecoins. 

However, BlockFi noted that stablecoin withdrawals through ACH bank transfers are free on the platform, but fees are attached to its wire withdrawals.