BlockFi Review 2022 | NextAdvisor with TIME
BlockFi could be a good choice if you are looking to exchange your crypto without complicated fees and are interested in a credit card with crypto rewards.
BlockFi is based in Jersey City, New Jersey, and was founded in 2017. BlockFi has garnered attention for its high-yielding crypto interest accounts, from customers as well as the Securities and Exchange Commission. He’s also had complications with his loan product, though that might not be a problem for most mainstream investors who just buy and hold for long-term value growth.
The company recently settled with the SEC after being accused of failing to register its retail crypto lending product, among other issues. BlockFi has agreed to pay $50 million in fines to the SEC and an additional $50 million to 32 states, the SEC announced in February. The settlement also required BlockFi to stop offering BlockFi Interest Accounts to US-based users.
We contacted BlockFi for comment on the SEC matter, and the company said in a statement that it is working to bring its product into regulatory compliance and register with the SEC under the appropriate statutes, after which it aims to reissue its interest in crypto-earning products to US customers.
“From the day we launched BlockFi, we always knew that strong engagement with regulators would be essential for the adoption of cryptocurrency-powered financial services,” said BlockFi CEO and Founder Zac Prince. , in the statement provided. “We intend BlockFi Yield to be a new SEC-registered interest-bearing crypto security that will allow clients to earn interest on their crypto assets.”
Despite outstanding issues with its crypto lending and interest accounts, BlockFi offers a relatively straightforward crypto trading experience, especially when it comes to how it incorporates its trading fees into overall crypto prices. Combine that with its BlockFi Rewards Visa Signature credit card, and it could be an attractive option for crypto investors.
Advantages and disadvantages of BlockFi
No trading fees
Instant trade execution
Rewards credit card
BlockFi at a Glance
- Less than 20 cryptocurrencies available
- No trading fees, but there are withdrawal fees
- Ability to borrow using crypto as collateral
- Hold coins in BlockFi’s custodial wallet or move them to your own wallet
- Minimum transaction amount of $20
- Apply for a rewards credit card
Cryptocurrencies available on BlockFi
BlockFi doesn’t offer many cryptocurrencies, although it does have some of the most popular, including:
- Bitcoin (BTC)
- Ethereum (ETH)
- Litecoin (LTC)
- Bitcoin Money (BCH)
- Pax Gold (PAXG)
- Uniswap (UNI)
- DAI (DAI)
- Chain link (LINK)
- Basic Attention Token (BAT)
- Algorand (ALGO)
- United States dollar coin (USDC)
- Tether (USDT)
BlockFi does not charge trading fees. Instead, the spread cost, or the difference between what it costs and what you pay, is built into the listed price, and you might find cheaper cryptos on other exchanges. The prices you can trade at may be different from the market price you see listed, so take note of the actual price you are trading at, rather than the current price. This will help you keep your records and help you stay on top of your transactions.
There are no fees for withdrawing to a bank account via an ACH transfer, although you will see a $20 fee for national transfers.
If you decide to withdraw crypto to an outside wallet, you will pay a withdrawal fee based on the cryptocurrency involved, and you may be subject to a withdrawal minimum and limit. Although this does not affect many everyday investors, for example, you can only withdraw up to 100 BTC per seven-day period.
Some assets allow one free withdrawal per calendar month on BlockFi, including:
Other assets, like ETH, LINK, PAXG, UNI, and BAT do not come with a free withdrawal option, so you will still pay the withdrawal fee.
Withdrawal fees are charged in the associated cryptocurrency. So if you withdraw ETH, you will pay a fee of 0.015 ETH. However, fees and limits may change in the future, so check the terms before moving assets from BlockFi to your own wallet.
BlockFi operates a custodial wallet. When you send US dollars to BlockFi, it’s converted to the same amount represented by a stablecoin pegged to the US dollar. Your stablecoin is actually what you trade when you buy other cryptos with your BlockFi account.
Your assets on the platform are actually owned by a regulated depository, including Gemini, which is a BlockFi partner. BlockFi touts its Gemini partnerships as an example of how its coordination with other industry-leading crypto companies provides users with increased protection and security. BlockFi also offers security measures, such as allowing you to set up your account to only withdraw to approved wallet addresses. This reduces the chances that someone hacking into your account can withdraw from your wallet to an address that is not on the whitelist. Additionally, BlockFi offers two-factor authentication.
Your money is not held in cash deposit accounts; it is exchanged for stablecoins, so it is not actually held in cash. You will therefore not have access to Federal Deposit Insurance Corporation (FDIC) or Securities Investor Protection Corporation (SIPC) Insurance. The FDIC is a government agency that insures deposits and supervises financial institutions for the protection of consumers, with the goal of maintaining public confidence and the stability of the US financial system. The SIPC is a non-profit organization that aims to replenish the securities and liquidity of investors in the event of the bankruptcy of a brokerage firm.
Credit card with rewards
BlockFi users can apply for the BlockFi Rewards Visa Signature credit card, which offers 1.5% cash back in crypto. You can also get cashback offers on eligible Bitcoin transactions. Crypto rewards are deposited monthly into your BlockFi account.
The card has a variable APR of 14.99% to 24.99%, and you won’t see any annual or foreign transaction fees. Balance transfers are not permitted and the card is not available to residents of New York State. For those interested in a more limited crypto investment strategy using credit card rewards points, the BlockFi Card could be an attractive product – just keep in mind that its reward rate is similar to other cards that reward you with cash.
Although we wouldn’t recommend most everyday investors to gamble with crypto loans, they are available on BlockFi. You can get a loan up to 50% of the value of your BTC, ETH or LTC if you have crypto you can use as collateral. Rates start at 4.5% and there are no prepayment penalties, but the loan does carry some risk. If the value of your crypto drops too much, you may need to refund some of it or add more crypto to the account in order to maintain the requirements.
BlockFi Interest Account
Although not currently available to US-based users, the interest-bearing account is designed to allow you to earn interest on the crypto held in the account. BlockFi is in the process of registering a similar product, called BlockFi Yield, with the SEC. If the SEC approves this new product, a version of it would be available for US-based customers.
Who is BlockFi for?
BlockFi is best if you are a beginner to intermediate crypto enthusiast who enjoys managing different aspects of your finances using crypto. This works if you want to quickly and easily buy, sell, and trade limited coins from a custodial wallet, while accessing other services like credit card rewards.
If you are a more advanced user, you may find BlockFi lacking due to the limited number of coins available for trading compared to other exchanges such as Coinbase, eToro, and Gemini which offer many more options. .
How to open an account with BlockFi
To create a BlockFi Account is quite simple. You must provide information about your identity, including your name and address, and provide photo identification. You will also need to connect a funding source to transfer money to the account. Once your account is opened, you can fund and start trading.
BlockFi vs other exchanges
|Coins||Less than 20 cryptocurrencies||150+ cryptocurrencies||50+ cryptocurrencies|
|Costs||No additional trading costs, as spreads are assessed in||deviation of 0.50%; trading fees between 1.49% and 3.99% (or flat fees of $0.99 to $2.99)||0.75% to 4.9% spread (varies by crypto)|
|Wallet storage||Hold in BlockFi wallet or transfer to your own wallet||Keep the coins on the exchange, in the Coinbase wallet or transfer them to your own wallet||Store coins in eToro account, eToro wallet or transfer to your own wallet|
Frequently Asked Questions
Can BlockFi be trusted?
BlockFi gives you a way to buy, sell, and trade cryptocurrencies, but the assets are not FDIC or SIPC protected. BlockFi’s assets are held by trusted custodians, including with Gemini. BlockFi offers certain security measures, such as allowing you to designate specific wallet addresses for withdrawal and two-factor authentication. There was a BlockFi hack using a SIM card exchange, but BlockFi claims no funds were lost and the hacker was unable to access customer assets.
Can you lose money on BlockFi?
As with any investment, if you buy crypto on BlockFi and the price drops, you could lose money. Additionally, since your BlockFi account is not FDIC or SIPC protected, you could potentially lose money if the company goes bankrupt.
Is BlockFi a credit card?
BlockFi is a platform that provides consumers with the ability to buy, sell, and trade cryptocurrencies. It also offers a digital wallet and issues a Visa credit card that earns crypto rewards.