New Crypto Deposit Accounts from BlockFi with Compound Interest

A new lending startup, BlockFi, has recently come into the cryptocurrency space offering loans and deposit accounts featuring compound interest.

On Tuesday, BlockFi described their Interest Accounts (BIAs) saying that they would feature APRs of 6% and that customers would see their payouts come in as the cryptocurrency of choice, once a month.  In the world of crypto investments this is certainly a first and is a feature that many have already jumped on, but the APR on offer is just the beginning of what makes this offering by BlockFi so exciting.

The 6% APR will also compound at 6.2% annually, putting these accounts into the sites of longer-term investors. According to Brad Michelson, a BlockFi marketing director, the company is proud to offer compound interest, which happens to be one of the “most powerful tools in finance”.

Gemini Trust Company is the company backing these interest-bearing crypto accounts. Co-founded by Tyler and Cameron Winklevoss, Gemini Trust is licensed and approved by the New York Department of Financial Services. Gemini Trust also offers insurance coverage for their account holders.

At first sight, BlockFi appears to be very similar to traditional interest-bearing accounts used for centralized currencies. There is an important difference, however. Although funds in held in BlockFi accounts are insured by Gemini Trust, they do not enjoy the same federal backing that other types of accounts do.

That is not to say that Federal backing will not happen in the future, but at the moment, investors must put their trust into the parent company behind BlockFi.

In an effort to quell worries, Brad Michelson had other information about BlockFi’s offerings, as well. Apart from the interest-bearing savings accounts, the company also provides crypto loans to larger businesses.

BlockFi loans work much like a traditional loan service. What sets this lending company apart from the pack, however, is that it accepts cryptocurrency as collateral for the loans they provide. There is a short approval process and then borrowers are able to decide on the loan parameters they are happy with before accepting their loan. Once the loan has been paid out, borrowers make their interest payments in crypto.

As with any other type of loan, the crypto loans offered by BlockFi come with a fee, and that fee can be adjusted in accordance with changes coin prices. That means, even if coin prices plummet, the company can easily adjust their loan prices to ensure that their interest payouts to investors are always made in full, and on time.

Michelson also announced that BlockFi now holds more than $10 million in assets, and it is all from their investors. To put that in perspective, the Beta version of this service only became active at the start of the year. We can likely look forward to exponential growth moving forward.

There are many clear benefits that come from BlockFi’s offerings and it is those same positive attributes that make this service as exciting as it is. If you have not heard of it yet, BlockFi is certainly worth a look.

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