Customers of a crypto lending company may soon see some changes in response to the market downturn.
Starting April 1, BlockFi will raise interest rates for Bitcoin (BTC) and Ether (ETH).
According to CEO Zac Prince, BlockFi users who hold between 0 and 5 BTC will now receive an annual percentage return of 6%, while users with up to 500 ETH will receive a return of 4.5%. Stable coins like the Gemini Dollar (GUSD) and the USD Coin (USDC) continue to reach 8.6%.
Why are interest rates changing now?
BlockFi has experienced “very limited liquidity” given the recent bitcoin crisis caused by the restrictions of the corona virus on the markets. The credit company said it had “not liquidated customer guarantees of credit below $ 4,500, even though the market has bottomed out around $ 3,800”.
Therefore, the decision to raise interest rates is unexpected given the way traditional financial institutions react to these market changes. Even the US central bank cut interest rates to 0%.
Reason for optimism in the current market
Nevertheless, Prince sees hope for the crypto market and said that BlockFi itself could “perfect its development” with “zero loss”.
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“Our balance sheet is stronger than ever. Developments in the institutional credit markets have given us the opportunity to increase our margin.”
The CEO further said that BlockFi has processed the largest number and volume of daily deposits and withdrawals in the history of the platform. The efforts of the BlockFi team have led to the fact that the volume of transactions in the double-digit millions range continues uninterrupted.
“As the global economy faces many headwinds, including the corona pandemic, you can be sure that BlockFi will remain a stable source of liquidity. At the same time, we will continue to offer solutions world-class wealth management to our clients and the entire cryptocurrency market. “
Notable Investors Behind The Crypto Loan Company
BlockFi raised $ 30 million in a Series B financing round in February. The main investors were Morgan Creek Digital, Winklevoss Capital and Arrington XRP Capital.
BlockFi has raised a total of more than $ 100 million since its inception in 2018. The platform currently has more than $ 650 million in digital assets.
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