How to Set Up a BlockFi Account

For the longest time, the only real option for turning a profit in the crypto world was to hold on to a cryptocurrency with the hope of a price rally or to sell a coin or token that is on a bullish streak. Fortunately, with the advent of BlockFi, investors in today’s market no longer have to rely on such strategies.

As new investors flock into the crypto markets, BlockFi (an innovative crypto start-up) is bridging the gap between the crypto space and the world of traditional financial markets with a suite of wealth management products such as the Bockfi Interest Account.

Thanks to Blockfi, crypto holders can now earn passive income on their crypto with upwards of 8.9%APY when they make qualifying deposits upon sign up. In this article, we will give you a step-by-step guide on how to set up a Blockfi account while also looking at the pros and cons not to mention FAQs about Blockfi.

What is Blockfi?

In simple terms, Blockfi can be described as a bank-like service for cryptocurrencies. Founded in August 2017, Blockfi serves as a cryptocurrency wealth manager and a crypto custodian. The service lets you earn interest on your crypto deposits, trade cryptocurrencies at zero fees, not to mention access loans with your crypto deposits as collateral. 

Blockfi is quickly becoming a popular non-bank alternative for crypto enthusiasts looking for lending and saving services. So far, the company has hit a record-breaking $1.5 billion in assets under management with a 0% loss rate across its lending portfolio. 

Founded by Zac Prince who is also the CEO, BlockFi consists of a team of innovators and business leaders who altogether have a wealth of experience in the capital markets. Since its founding, Blockfi has managed to raise over 500 million in funding putting the company’s valuation at $3 billion.

How to set up and register for a BlockFi account

Singeing up for a BlockFi account is easier than ever since you can either use the desktop app or a mobile app. As long as you are over 18 years old, BlockFi allows you to open the BlockFi interest account. While citizens from most countries can access the platform, Blockfi previously blocked users from New York, Connecticut, the European Union, and Washington DC due to regulatory issues. Also, the service is unavailable to users from courtiers sanctioned by the United States.

Step one: Sign up

The first step is to visit the BlockFi link and initiate the signup process. You can either visit this link https://app.blockfi.com/signup  or start by downloading the Blockfi app on your android or ios phone. Be sure to verify that you are following the right link that takes you to blockfi.com hackers can use fake links to steal your crypto.

Step two: Email verification

The next step, as with all sign-ups, is to enter your personal information including name, email address, and setting up a new password for your account. You also have the option of entering a referral code if you are using one. Since this is an investment account, be sure to read through the terms and conditions as well as the interest account terms of service documents carefully. If you are comfortable with the terms and conditions, go ahead and click the submit button.

Step three: Account verification

Once you confirm your email upon opening your account, verify your information through the BlockFi KYC/AML process and prove your identity. This process helps companies prevent money laundering and other malicious activities. BlockFi’s KYC process requires you to submit a clear photo of your documents for identity verification. The KYC process will also ask you if you are creating a business or individual account. If you are opening a business account, the process will be much more involving as you will be required to submit more details.

The individual account will require you to submit the following:

• Phone number
• Date of birth
• Source of funds
• Social security number

After completing the KYC/AML process, you will be able to access the home screen to see the different deposit options available.

Step four: Depositing funds

The process of funding your Blockfi account can vary depending on the country where you are from. If you are in the US, different state and federal regulations will apply to the funding options you will have access to. In general, however, Blockfi offers three methods of funding. These include:

• Transfer from another crypto account e.g., an exchange
• Wire transfer
• An Automated Clearing House (ACH)

Transfer from another crypto wallet

If you already know your way around cryptocurrencies and how to move funds from one wallet to the other, a transfer from another crypto account to your Blockfi account will be a piece of cake.

Here you will get started by clicking on the “Deposit” button on the home page. Select the cryptocurrency you want to deposit and this will reveal a QR code at the bottom of the page. You can easily scan this QR code with the wallet app on your phone for a quick transfer. The other option is to copy the Blockfi Bitcoin address and paste it on the “send to” section of the wallet holding the funds.

Once you confirm the amount you want to deposit, confirm the transaction and have the funds in your Blockfi account in a matter of minutes.

ACH setup

The ACH method is the least expensive of the three as it is a traditional funding method that takes about three business days. 

To set up an ACH funding process, head over to your account’s profile setting and select “Bank Accounts” from the drop-down on the left side of the screen.

The ACH process is enabled via Plaid which is a service that easily connects you to financial accounts through an app. Through Plaid, you can also connect your American Express and Venmo to any financial system.

Bank transfer

After you have set up your ACH, you can now transfer funds into your Blockfi account by selecting the “Deposit” button on the drop-down menu and selecting “USD” as the stable coin of choice. You can also select other fiat currencies depending on the country you are from.

Blockfi allows you to deposit up to $1000 per day for your first deposit via ACH using a Plaid connection and the funds are bound to take between 3 to 5 business days to clear. 

Wire deposit

Blockfi wire transfers do not require any rigorous setup as most of the setup required is on the side of your bank account. To begin the process, head over to your “Profile Settings” then to the “Wire Transfer” tab and click on the despot button with USD as a stablecoin as prompted.

At this stage, you will receive an eight-digit pin code that should be added to the notes section to verify your bank wire transfer. Scroll to the bottom of the page and fill in the Wiring details including the routing number, account number, and BlockFi account name, etc.

BlockFi products and services

Once you have funds in your BlockFi account, you start earning interest. You can also use those funds as collateral on a desired crypto loan. Here is a breakdown of the services you have access to with BlockFi.

Blockfi interest accounts

The BlockFi interest account is a game-changer in the world of crypto as it allows crypto holders to earn interest on their crypto holdings. The services allow users to earn interest for depositing Bitcoin, Ethereum, LTC, USDC, and GUSD.

With competitive interest as high as 6 percent annual interest on deposits of five Bitcoins or lower, BlockFi competes with the best lending platforms that offer different selections of cryptocurrencies. 

A deposit of more than 5 BTC can earn you an APY of 3.2%, while any deposit of supported stable coins (USDC, GUSD, and PAX) earn you 8.6% APY. Litecoin and Ethereum deposits earn a 5% and 4.5% APY respectively.

BlockFi loan service

Blockfi can distribute interest on deposited cryptocurrencies because it loans out the funds and charges an interest similar to how banks operate. BlockFi uses a loan-to-value (LTV) ratio that determines how much crypto a user can lend depending on their collateral. Therefore the higher the LTV the more you can borrow however, a higher LTV will also result in a higher interest rate. For example, with an LTV of 50%, you can borrow $15,000 with a Bitcoin collateral amounting to $30,000. The BlockFi loan feature is ideal for users with large crypto holdings as it allows them to have access to their crypto without necessarily selling that crypto and incurring huge tax requirements. Since the IRS treats cryptocurrencies as property, crypto holders are required to pay capital gains tax when they sell crypto.

BlockFi trading service

In case you don’t have Bitcoin but have LTC or Ethereum or one of the supported stablecoins, BlockFi’s trading platform allows you to easily exchange among the supported cryptocurrencies at zero fees. While the zero fees incentive is great for many users there have been complaints that the prices on the platform are set slightly higher than spot prices. A simple solution for this, especially if you plan to exchange large amounts, is to acquire spot prices on a regular exchange before depositing funds on the platform.

BlockFi’s security features

As with any other financial account, BlockFi accounts come with security features that keep funds protected. Considering the advantages of cold storage over hot wallets, BlockFi stores loan collateral with Gemini’s cold storage system. Gemini is a licensed digital assets insurance company based in New York. Although this security feature does not extend to BlockFi’s interest accounts, Blockfi has worked out a capital structure that shields clients from risks in case of a loss. However, there is not insurance thus giving the interest account a higher risk. BlockFi accounts also come with two-factor authentication plus a wallet address book that allows users to save their most frequently used addresses.

Other products

Apart from an interest and loan account, Blockfi is also working on a Bitcoin Trust account, according to reports of the company’s move to register the product with the SEC at the beginning of 2021. Upon approval by the SEC, BlockFi will be the first to launch a Bitcoin ETF where users can hold Bitcoin and use shares of the ETF to buy other ETFs. Other products include the BlockFi mobile App that makes it easy to access the platform. The company also boasts of a Bitcoin reward car in the pipeline where users will be able to earn 11.5% back of their Bitcoin on every purchase with the card.

BlockFi’s Pros and Cons

BlockFi Pros

• A speedy loan application process
• Easy to use for managing crypto funds and savings
• BlockFi strives to be transparent and gives the user full control of the assets
• The platform comes with a mobile app for full access at any time
• BlockFi has reliable security with features such as cold storage and two-factor authentication
• Loan repayment plans on BlockFi are flexible and can be customized to fit the needs of a client.

BlockFi Cons

• Lengthy processing for small amounts of cryptocurrencies
• Withdrawal fees can be expensive
• Interest rates could be higher

FAQs

Is Blockfi safe?

BlockFi is a regulated platform and operates within the federal and state guidelines. However, like any other investment in the crypto space, the BlockFi platform is not a risk-free product. Therefore, by signing up, you agree to the risk of losing your total principle. Furthermore, unlike a bank account, a BlockFi account is not subject to FDIC or SIPC protection. As much as BlockFi takes measures to shield its clients from losses with features such as cold insured storage and 2FA authentication, interest rates, fees, and other conditions are subject to change.

Does BlockFi have a minimum account balance requirement?

Blockfi no longer requires users to have a minimum account balance. As long as you have funds deposited to your Blockfi account, you will be able to start earning interest. However, BlockFi comes with withdrawal minimums of 0.003BTC and 0.056 ETH. In some cases, withdrawals for small amounts take longer than seven days to complete.

How often is BlockFi interest paid?

BlockFi interests accrue daily and are paid every month. You can calculate how much you can expect with your deposit using the BlockFi interest calculator.

What is the BlockFi business model?

BlockFi generates interest on deposited crypto assets by lending those assets to institutional borrowers. Therefore, to ensure repayment Blockfi lends on over collateralized terms hence the 0% loss across their loan portfolios.