BlockFi Increases Deposit Rates While Removing Free Monthly Withdrawals

On Friday, crypto lending platform BlockFi announced increasing its deposit rates across a range of cryptocurrencies.

Bishal Kumar Chanda2 min read
BlockFi Increases Deposit Rates While Removing Free Monthly Withdrawals

On Friday, crypto lending platform BlockFi announced increasing its deposit rates across a range of cryptocurrencies. Furthermore, the company has lowered the withdrawal fees for several cryptocurrencies and the monthly free withdrawal.

Earlier this week, this did not seem to be going well for BlockFi. After the latest crypto downturn wiped out the company’s main competitor Celsius, BlockFi was forced to lay off 20% of its staff.

Lately, BlockFi has turned to Sam Bankman-Fried’s FTX for an emergency revolving credit facility of $250 million. Moreover, the crypto exchange is also looking to purchase a stake in the crypto lending platform.

BlockFi increased rates

Meanwhile, in a filing on Friday, BlockFi said it would increase deposit rates for BTC, ETH, USDC, GUSD, PAX, BUSD, and USDT. Reportedly, the new policy will be effective from July 1.

Regarding the rate boost, the company cited three factors allowing it to increase the interest rate on its products. It includes effective risk management, decreasing market competition, and a changing macro yield environment.

As for risk management, BlockFi touted its past conservative rate strategy, giving it the current wiggle room to boost customer rewards in this market downturn.

The company stated that with the decrease in market competition, “we’ve maintained 100% uptime of our retail platform and institutional lending desk.” In contrast, other companies have paused or slowed down those operations.

Turning to the changing macro-environment, BlockFi pointed to the exponential rise in US Treasury yields that boosts lending rates and deposit rates. Meanwhile, Treasury yields are the annual interest paid out to investors holding government security.

Apart from increasing the interest rates, BlockFi would also be eliminating the policy of monthly free withdrawal of BTC, ETH, and stablecoins. However, the crypto lender plans to lower the withdrawal fees on all those assets.

“In 2022, over 75% of our crypto withdrawals have been honored without any fees,” BlockFi stated. “BlockFi was subsidizing this cost for our clients. Due to increased withdrawal demand, we’ve decided to implement a modest fee (maximum of $25) to cover the costs of honoring those requests.”

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