BlockFi is a cryptocurrency exchange that allows you to buy Bitcoin (BTC), and other digital currencies. There are also crypto-backed loans and a crypto credit card available. This platform offers a wide range of services. U.S. investors are not able to access one of the best products, the interest-bearing crypto accounts. For a detailed overview of the features offered by BlockFi, read our review.
Opening an Account
It is easy to open a BlockFi Account. The exchange will ask for personal information, such as your legal name and address. To trade on the platform you will need to pass an identity verification process. It’s a good idea for BlockFi to have your photo ID handy to save time.
What is BlockFi?
BlockFi is a mobile and web app that allows you to trade, buy, and sell cryptocurrencies. BlockFi accounts can be funded with an ACH transfer, wire transfer or cryptocurrency deposit.
The platform also offers cryptocurrency trading
- A wallet service allows you to store crypto
- Loans backed by crypto
- A crypto rewards credit card
BlockFi offers interest-earning accounts that can be used to purchase all cryptocurrencies. The interest program is not available to U.S. clients at the moment. Due to legal restrictions, BlockFi is unable to offer this program to U.S investors.
BlockFi Supported Cryptocurrencies
BlockFi offers 13 digital assets, which is quite low compared to other exchanges. Coinbase and Kraken, for example, offer more than 100 digital assets. Here is a partial list of assets it supports
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78% of retail investor accounts lose money trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Trading forex or CFDs on margin involves a high degree of risk and may not be suitable for all investors. There is a possibility that you may suffer a loss equal to or greater than your entire investment.
CFDs are complex instruments and involve a high risk of losing money quickly because of the leverage effect. 68% of retail investor accounts lose money trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
- Bitcoin (BTC).
- Chainlink (LINK).
- Etherium (ETH).
- PaxGold (PAXG).
- Litecoin (LTC).
- Dai (DAI).
- US Dollar Coin (USDC)
- Tether (USDT).
- Gemini Dollar (GUSD)
Benefits of using BlockFi
User-friendly
BlockFi’s interface makes it simple to purchase and sell cryptocurrency. You can create recurring trades to automate your investments on a daily basis, weekly basis, or monthly basis. This is useful if you are dollar-cost averaging. It is a great way to manage your risk when investing in crypto.
Rewards Credit Card
BlockFi is the first platform to offer a crypto credit card that allows you to earn rewards in crypto for every purchase. BlockFi Rewards Visa(r), Signature Credit Card earns 2% in your chosen cryptocurrency and there is no annual fee. BlockFi clients can apply for this card.
Crypto-backed Loans
With interest rates as low as 4.5%, BlockFi allows you to borrow funds in the U.S. Dollars against your crypto assets. With no prepayment penalties, you can get funds on the same day as your order and repay the loan as soon as possible. These types of cryptocurrency are acceptable as collateral for loans:
- Bitcoin
- Ethereum (ETH).
- Litecoin (LTC).
- PAX Gold (PAXG).
The advantages of a crypto-backed loan over selling your holdings are many. Borrowing rather than selling your holdings can save you money on taxes. Your crypto can also be kept.
There are risks when borrowing against crypto. You will need to put more crypto if crypto prices fall to the point where your collateral no longer supports your loan. BlockFi may sell your crypto collateral if this happens.
BlockFi Features
Trading Pairs
Blockfi offers up to 105 trading pairs in certain states. However, the number of trading pairs is only 55 in those states that do not allow stablecoin trading.
BlockFi does not offer trading pairs in New Mexico or Nevada.
Customer Support at BlockFI
BlockFi offers live customer service by phone, from Monday to Friday, 9:30 a.m. – 5 p.m. Eastern. Chatbot support is also available. This will allow customers to open tickets and connect to live support for any persistent issues.
Optional Security and Digital Wallets
BlockFi lets customers use their digital wallets to transfer assets into and out of the platform.
According to the company, security is a top priority and it has taken both technological and financial measures to protect its accounts. It is important to remember that although the exchange may look similar to services offered by banks, the assets on the platform do not have FDIC insurance.
The BlockFi Mobile App
BlockFi has mobile apps for Android and iOS. Both have received 3-star ratings by users.
Additional Features
BlockFi is known for its interest-earning products. However, new users cannot use these offerings as a result of a February 2022 agreement with U.S Securities and Exchange Commission.
The company states that customers who held BlockFi interest accounts prior to the change can still earn interest.
It offers loans to people who use their crypto as collateral. These loans are a way to access some capital without having to sell your crypto and without creating taxable events.
To get the best interest rate, you will need to invest a lot of crypto. The platform stated that a borrower for a $10,000 loan would have to deposit $20,000 in crypto in May 2021 and would be charged a 9.75% rate of interest. You would need to have $50,000 worth of crypto collateral in order to get a loan at 4.5%.
Pros and Cons
| Pros | Cons |
| Crypto trading is easy for beginners | Withdrawal fees |
| Card with Rewards | Limited selection of cryptocurrency |
| Loans backed by crypto | Some cryptocurrencies do not allow withdrawals |
BlockFi Features
BlockFi’s fees are slightly different from many other exchanges that often charge simple maker/taker fees. It doesn’t charge trading fees but it does charge withdrawal fees. It also imposes withdrawal limits. You can withdraw one time per month with certain assets. However, withdrawals from other assets will incur a fee.
Security
Although BlockFi is known for its high security standards and offers crypto-backed loans, it can be vulnerable to market volatility. We will first examine BlockFi’s security features and then consider the risks associated with its lending program to determine how safe it is.
Its security protections are comparable to those of other top exchanges in terms of security. Two-factor authentication (2FA) is available. This requires two forms to authenticate an account. It also provides a feature called allowlisting, which is often referred to simply as whitelisting. This allows you to restrict withdrawals to addresses that you have added to your allowlist.
This platform does not store crypto funds. This is done in partnership with custodians, with Gemini as its primary custodian. Gemini stores most crypto in cold storage. This means it is stored offline and has insurance to cover the crypto it stores online.
BlockFi’s biggest risk is its acceptance of cryptocurrency as collateral for cash loans. The LTV ratio for these loans is usually 50% or lower, which means that the collateral is worth at most twice the amount of the loan. If the collateral’s value drops, the borrower will need to add more or BlockFi will liquidate the position.
It suffered a loss of $80 million in 2022 due to Three Arrows Capital (3AC), failing to increase its loan collateral. BlockFi was forced to enter into a deal with FTX because of this and a bear-market. FTX extended BlockFi a credit line of $400 million and gave the option to purchase BlockFi.
Conclusion
Users looking for a cryptocurrency exchange with unique features such as crypto-backed loans and a crypto rewards card may find BlockFi a good choice. It’s important that you are aware of the difficulties customers have had with slow customer service and longer withdrawal times.
