Blockfi Reduces Interest Rates For Largest Account Users

| Publish date: 03/23/2019
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The crypto lender known as Blockfi has modified its terms of interest-bearing digital currency deposit account. The decision to do so was made just weeks after the company launched it.

The Demand of Product

According to the official report, accounts that hold either more than 25 Bitcoin or 500 Ether will only be asked to pay two percent on the amount directly deposited beyond the suggested threshold. This is basically in contrast to what was originally advertised, which is six percent. The said changes are expected to take place come April 1.

In an email sent directly by Blockfi, the decision is based on the demand for its product. As such, changes will affect product pricing and are officially starting in April.

As for the interest rate on balances deemed below the given thresholds, they will remain at six percent. This simply compounds monthly for a yearly percentage yield or APY of at least 6.2 percent. A tweet sent by the company’s very own director of marketing named Brad Michelson also expressed the same thought.

Michelson added that below 25 Bitcoin will automatically obtain the 6.2 percent APY.

Zac Prince, the CEO and founder of Blockfi, said that the change is due to the unexpected, massive demand coming from institutional clients. It turns out that these individuals are hoping to deposit more than the usual $1 million worth of digital currencies.

‘Consumer-Focused Product’

Prince further stated that there is a “rapid uptick” in terms of institutional participation. Apparently, this yield exposes the company and its current cryptocurrency borrow market in the inability to support at the 6 percent rate. In most cases, large depositors have the ability to give a call or meet them prior to depositing. From there, the company would immediately advise them about not depositing more than the aforementioned amount.

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The executed claimed that Blockfi started seeing institutional clients surfacing following the deposits of more than $1 million. Not only does the company acknowledge them as core clients, but the activity itself is also beyond what it wanted at that time. However, the firm clarifies that they are already starting to develop structures specifically designed to handle this kind of activity through a variety of channels in the near future.

The official blog post of the firm notes that the account was supposed to be a “consumer-focused product.” Moreover, it suggests that the changes are necessary in order to guarantee the company’s ability to support as many clients as possible.

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