Crypto lending platform BlockFi has recently announced that it will be increasing its deposit rates spread across spread across a wide range of cryptocurrencies. It also mentioned that it has decided to rescind permitting the policy of one free withdrawal that was previously available every month.
This particular announcement was followed after BlockFi provisionally bagging a $250 million revolving credit line from FTX. Amidst concerns regarding the company’s financial status , the lending platform has fired 20% of its staff in order to improve their finances.
The policies that BlockFi has decided to implement shall be made effective from July 1. The reason behind such policies are attributed to proper risk management strategies as mentioned by the company.
It also includes effectively helping bring down its market competition and overall enhance the macroeconomic yield conditions of the platform.
BlockFi And Its Recent Policy
In BlockFi’s recent most policy, the rates for BTC, ETH, USDC, GUSD, PAX, BUSD and USDT into BlockFi Interest Account (BIA) have all been hiked.
In order to defend the price initiative the platform stated that the previous rates had provided chance of bigger customer rewards during the crypto market crash. In their official Twitter account, it had announced the increase of the rates across all tiers of the aforementioned cryptocurrencies.
For instance yields on Bitcoin shall be hiked by 0.50% to 1.90%. Ethereum will see an increase by 0.50% to 1.75%. Stable coins on the other hand will also see a similar hike by 0.50% to 3%.
With this the rates for Bitcoin and Ethereum will start to fall between the range of 2% and 3.50% while stable coins will oscillate between 6% to 8.75%. This hike shall come into effect at the beginning of next month.
In relation to withdrawal fees the company has stated that it would lower them. Withdrawal fees for Bitcoin will fall by $1 and $2 for Ethereum, while stable coins will see a fall of $25. Along side this BlockFi will completely do away with “one free withdrawal per month” policy.
Reason Behind The Policy
BlockFi is of the opinion that these policies will change three very important factors that shall allow the rate boost of the platform. These three factors include effective risk management, decreasing market competition and a changing macro yield environment.
While mentioning the reason of risk management, Blockfi seems to be confident that the new strategy will bring down competition from other companies. This is so as BlockFi shall provide a 100% uptime of its retail platform and its institutional lending desk while the other platforms shut withdrawals.
It also stated that it had never gotten exposure to UST or stETH because of increased volatility in the crypto market over the past two months.
BlockFi also has pointed towards the rise in US Treasury yields boosting lending and deposit rates for those uninitiated Treasury yields are annual interest paid out to investors who hold a government security.
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Featured image from Forbes, chart from TradingView.com