Today, there are different ways available for you to earn interest on your crypto holdings, that too without having to sell them. It allows you to weather the market corrections and prevent you from force selling your digital assets.
To earn passive income on your virtual currencies, there are currently several crypto lending platforms where you can put your crypto up for collateral and borrow fiat money, as well as earn interest on your holdings.
BlockFi vs CoinLoan: Intro
CoinLoan is an Estonia-based peer-to-peer (P2P) crypto lending platform founded by CEO Alex Faliushin and Max Sapelov in 2017.
A regulated crypto lender, which is licensed in Europe and follows strict KYC and AML rules, caters to borrowers and lenders as well as both digit and fiat.
Besides retail, CoinLoan also offers its products to corporates for which it has an over-the-counter (OTC) desk enabling them to deal with large volumes of digital assets at a predefined price. It also allows them to process orders fast with no settlement delays.
Same as CoinLoan, the US-based BlockFi was also founded in 2017 by CEO Zac Prince and SVP of Operations Flori Marquez.
The company that holds over $10 billion in assets recently saw its valuation increase to $3 billion after completing its $350 million Series D round early in 2021. BlockFi has also filed for a “Bitcoin Strategy ETF” that would invest in BTC through futures contracts trading on CME.
Currently, the digital assets lender is facing regulatory scrutiny in different states, including Alabama, Kentucky, Texas, Vermont, and New Jersey. BlockFi says it is “lawful and appropriate for crypto market participants” and that it has been in “active dialogue” with regulators.
Recently, BlockFi had a $100 million settlement with the US Securities and Exchange Commission (SEC) regarding its yield generating account and said it will register its new crypto lending product called BlockFi Yield with the agency.
Now let’s look at all the products and services offered by these crypto lenders.
CoinLoan vs BlockFi: Interest-bearing accounts
To earn passive income, BlockFi’s interest-bearing account offers yields to investors who store their crypto on their platform. Here, interest starts accruing the day after you deposit, and the payout happens monthly.
BlockFi Interest Accounts (BIA) follow a tiered rating structure and supports over 15 cryptocurrencies.
Currently, it is offering an 7.25% rate on stablecoins like USDC, USDT, PAX, and DAI. As for crypto assets, the rate earned goes down sharply the more crypto you deposit. For instance, in tier 1, which is in effect till the deposit of 0.1 BTC, the APY is 4.5%, while for tier 3, the deposit limit is 0.35 BTC, and in this tier, you will only get 0.1 APY.
The rate further fluctuates with market conditions as seen when BlockFi slashed its rates thrice in just the first half of 2021.
BlockFi also has an Interest Payment Flex option that lets you choose the currency your interest is paid in. Additionally, Its corporate product functions the same way as an individual BlockFi Interest Account but requires additional documentation and a longer verification process.BlockFi also has a feature called ‘refer a friend’ where you and your friend earn $10 each in BTC for every person that signs up using your referral code and deposits at least $100 into their account.
BlockFi Interest Account (BIAs), however, are not offered or sold in the US anymore. Once the registration process of BlockFi Yield is completed, the company says, those accounts will automatically roll over into the new product.
CoinLoan’s earn product, on the other hand, supports crypto, stablecoins, and fiat currencies that come to a total of 26. You can earn as much as 12.3% APY on these assets through CoinLoan Interest Account. Interest on CoinLoan accrues daily and is deposited on the first day of each month directly into your account on the platform.
This high APY also includes a 2% CLT staking reward. CLT is the native token of CoinLoan with a total supply of 22 million. Currently, CLT is trading at $19.93, -89.948% from its all-time high of $192.18 hit on 6 December 2020 at 15:29.
The holders of this Ethereum-based utility token grant them a 50% discount on borrowing fees.
CoinLoan vs BlockFi: Crypto Loans
The borrow option at CoinLoan allows you to obtain a loan of as much as 70% of your crypto holding’s value that you have put up for collateral. This high loan-to-value ratio, however, can be risky in the event of a crypto crash.
In such a circumstance, CoinLoan will send you an email informing you about the current status of your crypto loan. Now, you will have two options here. First, you can clear the crypto loan in either part or in full, whereas the second option is to add more collateral.
Besides popular crypto assets like Bitcoin and Ethereum, CoinLoan also supports Uniswap (UNI), Wrapped Bitcoin (WBTC), Bitcoin Cash (BCH), Sushi (SUSHI), Compound (COMP), YFI, and Axis (AXS). Moreover, Aside from EUR and GBP, you can also receive your loan amount in stablecoins like USDC, TUSD, PAX, USDT, DAI, and BUSD, as well as several crypto assets.CoinLoan actually has three different kinds of crypto loans available on its platform: crypto-to-crypto, crypto-to-fiat, and fiat-to-crypto loans.
One of the benefits of borrowing on CoinLoan is that loans are approved automatically here, and you don’t have to file any paperwork or go through credit history checks. Additionally, there are no hidden fees, fines, and lock-ins.
The minimum amount you can borrow is $100 for 30 days with a loan setup fee of 1%, which is halved if paid in CLT. CoinLoan doesn’t charge any fees for any deposits or withdrawals either.
Instead of selling your crypto when you need cash, borrow funds against your crypto assets on these platforms with low-interest rates.
In comparison to CoinLoan’s 70% LTV, BlockFi only allows you to borrow 50% of the value of your crypto collateral at an interest rate of 9.75%. To get a lower rate of 4.5%, your LTV ratio will further decline to 20%. Its loan origination fee meanwhile is higher, which remains constant at 2%. BlockFi also allows its users to use crypto-backed loans to buy different assets.
Now, in the event of a drastic drop in the value of your collateral, you will get a margin call, and you would be required to add more collateral to your account. If you take no action within three days of the call, BlockFi can liquidate your position.
BlockFi offers free one crypto and one stablecoin withdrawal per month to its users as well. But beyond this, the fees vary by each crypto such as 0.00075 BTC, 0.015 ETH, 0.001 LTC, 2 LINK, 2.5 UNI, 0.035 PAXG, and 60 BAT per withdrawal but will cost you a standard $50 for all stablecoins USDT, GUSD, USDC, BUSD, PAX, and DAI.
CoinLoan vs BlockFi: Additional productsBlockFi has a lot more to offer you than just earning interest and borrowing against your crypto, as it also has a trading service for you to buy, sell, and trade the supported assets instantly using your bank account via ACH, starting for $20.
Another of its products is Bitcoin Wallet, where you can start trading instantly with no balance requirement. But you can only buy, sell, trade, and hold your crypto and can’t earn interest on them. You can store your BlockFi credit card rewards here though.
The BlockFi Rewards Visa Signature Credit Card allows its users to earn 1.5% back in crypto on every purchase. In the first three months, this rate is much higher at 3.5%. If you spend over $50k annually, you can earn back 2% without paying any annual or foreign transaction fees here.
For its institutional investors, BlockFi has a full suite of prime capabilities across lending and trading. Accredited investors can access Bitcoin Trust, Ethereum Trust, and Litecoin Trust, while miners, crypto exchanges, and ATMs can also borrow digital assets or USD to fund their business.
BlockFi also has a crypto exchange offering 15+ cryptocurrencies to buy, sell, and trade, including Bitcoin, and as per its user reviews, BlockFi is a pretty good Bitcoin trading platform. Plus, it also has crypto portfolio management tools that crypto traders can leverage to grow their crypto holdings. Its users even call BlockFi the best crypto trading app.
Unlike BlockFi, additional features offered by CoinLoan are limited to trading. You can buy, sell, and swap 24 supported assets. But the platform does support fiat deposit via a large number of options viz. SWIFT, SEPA, Visa, MasterCard, AdvCash, and wire transfers for a secure and seamless experience.
For cold storage of its clients’ assets, CoinLoan uses the qualified custodian BitGo which has $100 million insurance cover from Lloyds. Crypto assets are stored here in offline, cold, multi-signature wallets, and to prevent potential loss encrypted keys' parts are kept in the bank's safe-deposit boxes.
Other security measures taken by CoinLoan include DDoS Protection, Secure Cloud Infrastructure, Web Application Firewall (WAF), and Modern Encryption Standards (SSL with TLS 1.3, DNSSEC, HSTS). It has also introduced a bug bounty program, performs regular vulnerability scans, and uses two-factor authentication (2FA).
As for BlockFi, it keeps its reserves with several well-known third parties custodians including Gemini and Coinbase as well as BitGo.
This crypto lender has a self-service security feature called allowlisting to ensure that digital currencies in your account can only be sent to known withdrawal addresses. You can use it to either ban all crypto withdrawals or restrict withdrawals to only a list of known addresses, including external cryptocurrency exchange accounts.
Compare with BlockFi and CoinLoan alternatives
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BlockFi vs CoinLoan Conclusion
As the crypto assets lending space continues to expand along with the broad crypto market, we are seeing several regulated and reputable crypto lenders coming and offering attractive interest rates to users, which are much higher than their traditional counterparts.
Among these crypto lenders, the US-based BlockFi is a publicly known company that is currently facing scrutiny from regulators. BlockFi offers tiered annual interest rates, which are paid out monthly but are volatile and subject to market conditions.
The good thing is it offers one free withdrawal each for digital currencies and stablecoin every month and uses several industry leaders for safe storage of your crypto.
In comparison, CoinLoan supports more digital currencies and offers a higher interest rate which, like BlockFi, is subject to market conditions. While it supports both crypto and fiat, it has a much higher LTV ratio.
There are no credit checks here, and users can gain more interest rewards by staking CLT. There is also a lack of transparency in asset storage.
Are you wondering if you will have any crypto tax liability on your earnings from BlockFi or CoinLoan? Well, yes BlockFi and CoinLoan users have to pay taxes on their income from their interest account as it comes under crypto taxes! BlockFi even states on their website that the earnings from the crypto interest account will be taxed as per the fair value of the digital currency in its users' accounts.
So, both platforms have their features and limitations, but now that you know all of that, you can make an informed decision and choose the cryptocurrency investment platform that best suits your specific needs.