According to the company, effective risk management enabled the hike.
Three days after receiving a $250 million revolving line of credit from FTX, BlockFi is increasing the yield on its lending products for Bitcoin, Ethereum, and stablecoins.
Effective Risk Management’s Influence
The interest rates for BlockFi’s loan products will be increasing soon.
The cryptocurrency lending firm will be raising its rates across all levels for Bitcoin, Ethereum, and other stablecoins like USDC, USDT, GUSD, PAX, and BUSD, according to its official Twitter account.
The yields for Bitcoin will rise from 0.5 to 1.9 percent, Ethereum from 0.5 to 1.75 percent, and stablecoins from 0.5 to 3 percent. As a result, the rates for Bitcoin and Ethereum are now between 2 and 3.5 percent, and the rates for stablecoins are between 6 and 8.75 percent. Beginning in July, the price hike will take effect.
Additionally, the company will reduce withdrawal costs for Bitcoin, Ethereum, and stablecoins by $1, $2, and $25, respectively. On the other side, the company will completely discontinue its “one free withdrawal per month” policy.
BlockFi said that effective risk management, reduced market rivalry, and a shifting macroeconomic yield allowed it to raise interest rates. For instance, it noted that it had no exposure to UST or stETH, and it claimed that BlockFi “was among the first to de-risk our credit and market risk exposure as crypto market volatility escalated in May and June 2022.”
Notably, the $250 million loans the business received from the cryptocurrency exchange FTX three days prior were not mentioned in the report. The company’s balance sheet and platform strength have been “bolstered” by the loan extension.
The business had already fired 20% of its staff and paid off a loan made to well-known cryptocurrency hedge fund Three Arrows Capital. BlockFi lost more than $285 million over the previous two years, according to a leaked financial statement. The paper has validated rumors regarding the company’s financial difficulties even though their validity is unknown.