BlockFi Raises Deposit Rates, Eliminates Free Withdrawals
The rate increases across BTC, ETH, USDT and other crypto deposits come after layoffs at the company and a $250 million emergency line of credit from FTX.
Crypto lending platform BlockFi on Friday announced increases in deposit rates across a range of cryptocurrencies. Alongside, the company lowered withdrawal fees on a number of cryptos while ending a policy allowing one free withdrawal per month. Both new policies are effective July 1.
Early this week, things did not appear to be going well at BlockFi.
After the crypto crash appeared to wipe out the company’s main competitor Celsius, BlockFi was forced to lay off 20% of its staff and turn to Sam Bankman-Fried’s FTX for an emergency $250 million revolving credit facility.
In a filing on Friday, however, BlockFi said it will be increasing deposit rates for BTC, ETH, USDC, GUSD, PAX, BUSD and USDT in July.
The company cites three factors allowing the rate boost: effective risk management, decreasing market competition and a changing macro yield environment.
Regarding risk management, the firm touted its past conservative rate strategy as giving it the wiggle room today to boost rewards for customers in this market downturn.
As for decreasing market competition, BlockFi noted, “we’ve maintained 100% uptime of our retail platform and institutional lending desk” while others have slowed down or paused those operations.
Turning to the changing macro environment, BlockFi noted that the dramatic rise in U.S. Treasury yields is boosting lending rates, and therefore deposit rates.
In addition to increasing rates, BlockFi said it would be eliminating a policy allowing the free withdrawal of BTC, ETH, and stablecoins once per month. The company will, however, be lowering withdrawal fees on all of those assets.
“In 2022, over 75% of our crypto withdrawals have been honored without any fees,” BlockFi said. “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.”
Today’s news comes alongside reporting from The Wall Street Journal that FTX is in talks to acquire part of BlockFi.
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