BlockFi Adds Compound Crypto Savings Account

BlockFi and other crypto lending organizations with similar offerings are helping to make hodling great again.

After running the private beta service for its cryptocurrency savings account for two months in 2019, cryptocurrency startup BlockFi has rolled out the service for general customers.

The BlockFi Interest Accounts (BIA), which are available in both bitcoin and Ethereum, are offered with a compounded annual interest rate of up to 6 percent. Users who sign up with the service can start earning interest on their assets immediately.

The interest is paid out in bitcoin or in ether on a monthly basis at the start of each month. BlockFi also mentioned that the interest can compound on the total balance, allowing the account holders to realize an annual yield of up to 6.2 percent.

The accounts are custodied by Gemini Trust, a regulated and insured custodial entity.

The account opening and operating process is easy to follow. With that, the account carries the advantage of not locking the users’ funds for any period of time.

Users of the savings account, dubbed as BlockFi Interest Account (BIA), can take out their funds out of the account at any point of time. In other words, they can use their BIA like a digital wallet, while also having the benefit of earning some profits while they keep their assets safe.

But there’s a catch to the withdrawal system.

While BlockFi mentions that it pushes withdrawals through the same day, the firm also clarifies that it reserves the right to have the withdrawals processed over a 7 day period. By taking a brief look at the account’s structure, this possible restriction may have something to do with the way BlockFi generates the profits on deposited assets.

As a company that originally started off by offering crypto-backed loans, BlockFi offers its users fiat cash loans in exchange for placing their cryptocurrency as collateral. The firm then earns interest on the offered loans just as a conventional lender does.

BlockFi clarifies that it would follow the same method for the assets held in the BlockFi Interest Accounts. But instead of using the assets to back retail borrowers, the firm would lend the assets to institutional and corporate customers. This enhances the security of these funds further. Along with this, BlockFi also monitors any risk through its own risk management mecthods.

The service is available worldwide except for a few select countries. Within the U.S., it is also available throughout the country save for a few states. Interested users who want to make use of the BlockFi Interest Account need to have at least 1 Bitcoin or 25 Ether as minimum balance to open an account.

BlockFi reportedly also has plans to offer a crypto credit card in the near future.