Our take on BlockFi
The bottom line:
BlockFi stands out due to the simplicity of its trading schema. Plus, the institutional investor backing allows the platform to create systems for its users to earn returns on their tokens – whether through its centralized trading exchange, the platform’s credit card, or even crypto-backed loans.
Best for simple yields
On BlockFi's website
Crypto has been making headlines consistently since Bitcoin was first created – and this trend has only increased with time. Savvy users may have noticed that in February 2022, crypto platform BlockFi agreed to pay the SEC a $50 million penalty for pedaling unregistered offers and sales of the lending product, BlockFi Interest Accounts (BIAs), to customers. The same company had sought a valuation of $5 billion dollars last June, but is now valued at less than $500 million.
BlockFi has since made changes to its practices in order to rectify this issue with the SEC and hopefully prevent incidents like this in the future. However, this incident has led a lot of users — current and potential — to question whether or not BlockFi is the right platform to use for investing in crypto. And, rightfully so. Before you hop on the BlockFi platform to trade, purchase, or stake crypto, here’s what you need to know.
BlockFi pros and cons
- Tons of utility
- Institutional backing
- Fee-free trading
- Crypto-backed loans
- Trouble with regulation
- Services region-locked
- Small coin selection
- Non-custodial exchange
A lot of unique features, including a credit card
BlockFi is taking the route that a lot of similar companies are and diversifying its platform to help draw in potential users. A few of the notable features that it offers are a centralized exchange for trading tokens, a wallet mobile app for interfacing with its exchange on the go, lending programs backed by crypto, a crypto credit card, and the ability for those who are located outside of the U.S. to gain interest on their holdings.
Of these, the credit card is perhaps the most unique feature. Competing companies, such as Crypto.com, offer users crypto rewards debit cards rather than credit cards. But BlockFi offers a credit card option — which sets them apart in that regard. And it’s not just any old card; the credit card comes with solid benefits, such as a 1.5% unlimited crypto back (much like cash back, but with crypto rewards instead) and no annual or foreign transaction fees.
Unique institutional backing
BlockFi’s mission is to redefine banking. Boasting itself as the only independent lender with institutional backing, BlockFi is essentially looking to be the go-to company for users who are looking to enjoy the traditional banking experience and benefits without sacrificing the ability to interact with the decentralized finance sector.
No tacked-on trade fees
Most exchanges charge at least some fees for trading, staking, or other transactions, and users should take them into account before making trades or withdrawing crypto from the exchange. The average for many centralized exchanges hovers around 3% per trade.
That isn’t the case with BlockFi, though. With this platform, all trade fees are taken into account when buying and selling on BlockFi’s exchange. In other words, what you see is what you get. That is part of BlockFi’s goal to make crypto trading simpler. And, as an added bonus, there’s less room for error on the user’s part when the math is done for them.
Crypto-backed loans are one of the most popular crypto products available on the BlockFI platform, and for good reason. Crypto holders can take out loans and use their crypto as collateral, which allows them to leverage their tokens in a number of ways.
One of the most concerning issues with BlockFi is the recent hot water it got into with the SEC earlier this year. This issue stemmed from the fact that BlockFi wasn’t registering the “offers and sales of its retail crypto lending product.”
While BlockFi still maintains that there was no wrongdoing on its part, it ended up paying a $50 million fine to the SEC and ceased all activities that were not under the Investment Company Act. This could prove to be an issue for users who are looking for a reliable company to use for investing in crypto. After all, problems with managing governmental restrictions and regulations are not going to inspire confidence.
Unavailable services by region
Because of the problems with managing and maintaining governmental regulation standards, United States-based users were, until recently, unable to take advantage of BlockFi’s loans, and were also unable to interact with their BIA accounts — which was how users gained interest on their holdings within the exchange.
The issue has since been resolved, at least to the point that users are able to once again take loans out with BlockFi. However, BIA accounts are still unavailable to anyone living in the U.S. The high APY associated with these BIA accounts has been an attractive feature, so the fact that these accounts are unavailable to such a large user base is something to note.
Small coin selection
One thing that users may notice when trying to invest through the BlockFi platform is that the number of tokens available for trade is one of the lowest in its class. With just 15 tokens listed on the exchange, which includes both stablecoins and crypto tokens, the selection is extremely limited.
Users who are looking to adopt coins early in their inception will not have the option with this platform – and there doesn’t seem to be much evidence that the number or selection of tokens will increase in the near future.
BlockFi is a centralized exchange, which means that there is a rigorous process during account setup that requires you to verify your identity. It also means that the exchange has custody of the tokens you purchase, trade, or otherwise utilize on the platform. That may not be preferable to certain types of users, who want to retain control over their tokens — and the exchange having custody could mean that if it goes down, your tokens go with it.
What BlockFi is best for
- Simple trading model: The platform is user-friendly and easy to navigate, so new users won’t need to have a ton of crypto know-how to use it.
- Crypto-backed loans: Crypto-backed loans are one of the most popular crypto products available, and the interest-earning opportunities can be pretty lucrative for users.
- Credit card: BlockFi doesn’t offer just a debit card with crypto rewards; it offers a true credit card with a crypto rewards structure that can pay off for crypto enthusiasts.
- Instant trades: There’s no waiting game with this platform; trades are instantaneous.
Key features of BlockFi
There are a few key features worth noting with BlockFi, including:
- Credit card: Users are able to apply for a credit card that’s backed by crypto with no hard credit pull until the card is issued – meaning that there is no negative impact on credit score when applying.
- Crypto-backed loans: Users are able to take out loans with their crypto as collateral, allowing them to leverage their capital in a number of ways.
- No complex trade fees: Trade fees are built into the price of the tokens, meaning that there is no calculation necessary on the part of the users.
Crypto lending rates on BlockFi
Fees for using BlockFi
The first withdrawal from BlockFi per month is free – but depending on the coin and amount of investment can have higher than average fees if withdrawing more than once a month. Here are some common fees you might experience with BlockFi withdrawals.
|BTC withdrawal||0.00025 BTC|
|ETH withdrawal||0.0135 ETH|
|GUSD, USDC, BUSD, PAX, DAI, USDT withdrawal||$25|
Alternatives to consider
Uniswap: Good for users that want to control their own assets
For many users, the idea of handing over control of their tokens to a centralized exchange can be a difficult choice to make. Uniswap, on the other hand, doesn’t require it. That’s because it’s a decentralized exchange, which is a type of exchange that allows users to maintain access and control over their tokens at all times. While Uniswap initially has a higher learning curve compared to BlockFi, determined users have a lot to gain from putting in the effort.
Crypto.com: Good for users who are interested in a crypto-backed card
BlockFi’s crypto-backed credit card has been a major selling point for this platform. If a user is interested in a similar concept but prefers not to take the credit card route, the larger Crypto.com platform also offers a crypto-backed card, but it’s a debit card in which users can pay for items directly through their crypto holdings.
Binance.US: Good for users who want to trade in large centralized exchanges
If a large selection of tokens in one of the biggest names in crypto is something that a user is looking for, then Binance.US is going to be high on the list of options. With over 600+ tokens offered on its centralized exchange, there are enough options to cover even the most particular of users.
Is BlockFi right for you?
BlockFi has had a rocky relationship with the SEC recently, and while that doesn’t necessarily mean that it will continue this trend in the future, it also isn’t the best sign for an investment platform. This, in tandem with the lack of transparent security measures and region-locked programs, can be a hard no for a lot of users. If users can look past these potential issues, though, and choose to focus on the high APY interest rates and fee-free trading for their relatively small token base, then they may be able to find opportunities in the various other amenities offered by this platform.
Final thoughts on BlockFi
One of the major issues plaguing BlockFi as of now is the lack of transparency for users on a number of their amenities. Whether that’s something like trying to find articles regarding specific security measures taken to ensure that users’ assets are safe, or even whether or not users are able to enjoy the benefits of the interest rates in their region, it can feel like BlockFi’s strategy at times is to keep users muddy on the details. Despite this, BlockFi does have some unique offerings and ideas compared to their contemporaries – but it would benefit them to spend more time providing informational resources to users, clarifying how (and if) these amenities work for them.
DeFiRate.com reviews cryptocurrency and Web3 products, services, and operators based on five quantifiable metrics to help crypto users understand how they compare based on similar metrics. For the best centralized exchanges, our editorial team compared customer support, 30-day trading volume, fees, cryptocurrencies available to trade, and average mobile app ratings from each operator to rate the top competitors in the space.
Frequently asked questions
Is my crypto safe when using BlockFi?
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