- BlockFi makes good on its plan to introduce a crypto-interest acquiring savings account, launched with immediate effect
- The company is targeting an international market
- It also hopes its compliance focus will attract institutional investors
New York lending firm BlockFi announced Tuesday it is launching a crypto savings account with 6 percent annual interest, payable monthly in bitcoin or ether.
In a statement, BlockFi said the new account offered the highest interest rate on crypto in the market, beating firms like Cred and Celsius, as well as being the first to provide yields in crypto. It added that BlockFi Interest Accounts (BIA) will also be backed by a regulated and insured custodian in Gemini, the New York crypto exchange operator.
Other perks include being able to withdraw funds at any time as well as compounding interest monthly, delivering a 6.2 percent APY, the firm said.
“People get 2% on their savings account here [in the US]. In Japan it’s zero…6 percent to investors in Japan is eye-watering,” its CEO, Zac Prince told the Block, noting that the firm was especially targeting institutional investors and the Japanese market.
“It’s something to get really pumped about given the negative rate environment.”
BlockFi users will be able to start earning interest immediately after depositing a minimum of 1 bitcoin or 25 ether. However, users in New York, Washington, and Connecticut are currently ineligible due to regulatory issues, Prince added.
The yield provided to BIA customers is generated from institutional borrowers. But despite it being more expensive to lend ETH, Prince said the decision to provide equal interest rates for both BTC and ETH “made sense.”
The Block first reported BlockFi’s plans to launch an interest-bearing savings account in December, just before they began a private beta-run of the BIA. However, at the time, Price said the interest rate was unlikely to stay constant.
“[The rate] will fluctuate and be subsidized in effect by our venture investors,” Price said in December.
BlockFi has also attracted some measure of attention over the last year, raising $4 million in December after drawing in funds from ConsenSys, SoFi, and Kenetic Capital.
BlockFi reportedly intends to launch a credit card product for crypto in 2019.
“We want to do a credit card in the US that gives you, instead of airline miles, crypto,” Price said last year, expecting to partner with an established credit card company on the product.
For now, however, Prince says they are concentrating on the savings account alone, and could not provide an update on the credit card.