The BlockFi Interest Account is no longer available to people residing in the United States as of February 14, 2022.
Let’s go over what happened, how this will effect BlockFi, and what other options are available for those who want to continue earning interest on their crypto assets.
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Update on BlockFi Interest Account
BlockFi Interest Account (BIA) is an interest-bearing account that holds coins you’ve deposited or purchased on the exchange. It’s a popular product that works much like a traditional savings account. The major difference is that it doesn’t have FDIC insurance to protect it against failure.
Many readers know that I’ve been using BIA to earn interest on my crypto holdings. I transferred $50,000 there and exchanged it for stablecoins (GUSD and USDC) that’s earning me a current rate of 8.75% APY.
Unfortunately, this type of account is no longer available to new customers in the United States. Existing customers will continue to earn interest on the funds currently in their BIA.
Existing and prospective BlockFi clients outside of the U.S. are unaffected by these changes and continue to have full access to the platform, including opening new BIAs and adding assets to existing BIAs.
So what happened?
This is a nascent industry and regulation of the fast-evolving crypto world is in flux. While cryptocurrencies haven’t been deemed to be securities (or not yet at least), the Securities and Exchange Commission (SEC) cited case law that would make the BIA a form of investment contract.
In their settlement with the SEC and state regulators, BlockFi can continue to serve existing BIA clients, but clients are not allowed to add further assets to their BIAs.
BlockFi intends to file a new registration statement to the SEC for BlockFi Yield, a new crypto interest-bearing security. This would make it the first crypto account ever to be registered with the SEC. It will be available for new and existing BlockFi customers and upon launch (expected within the next 3-9 months), will replace BIA.
No Effect on BlockFi Wallet
It’s important to note that this doesn’t affect your ability to buy, sell, and store your crypto assets on BlockFi – you can still do it all through the BlockFi Wallet account. You just won’t have the ability to earn interest by transferring crypto to BIA.
The sign-up bonus up to $250 is also unaffected. Going forward, the bonus will be credited into the BlockFi Wallet account instead of BIA based on the amount you deposit:
|Deposit Amount||BTC Bonus|
|$100 – $1,499||$15 BTC|
|$1,499 – $19,999||$20 BTC|
|$20,000 – $39,999||$40 BTC|
|$40,000 – $74,999||$75 BTC|
|$75,000 – $99,999||$100 BTC|
What will happen with my BlockFi Interest Account?
You will still have your BlockFi Interest Account (BIA). You will continue to earn crypto interest, which will be deposited monthly in your BIA.
Can I add funds to my BIA?
No. BIA clients based in the United States may not add further assets into their BIAs. You’ll be able to add additional funds into your BlockFi Wallet, which is the default account for buying, selling, and storing your crypto assets.
You are able to move assets into your Wallet to trade, but once moved from BIA to Wallet, they cannot be moved back and they will cease to earn interest.
When can I get BlockFi Yield?
This is dependent upon the registration process with the Securities and Exchange Commission. Once the BlockFi Yield registration statement is filed and declared effective by the SEC, BIAs of U.S. clients will be exchanged for BlockFi Yield, unless clients instruct BlockFi otherwise.
As of February 2022, BlockFi is estimating that BlockFi Yield will be available in 3 to 9 months.
Alternatives to Earn Interest on Crypto
The question everyone has been asking is, “Where can I earn interest on crypto now?“
There are a number of cryptocurrency exchanges that still offer interest on your crypto assets. Here’s what I’m doing since I was holding crypto in my BlockFi Interest Account before the SEC resolution was announced:
- Maintain $20,000 in GUSD in my BIA – that’s the maximum amount that can earn the highest interest rate of 8.75% APY per this rate table.
- Use other crypto exchanges and platforms to earn interest on the rest of my assets.
- Store the rest that I intend to hold long-term (HODL) in a cold, offline wallet.
Regarding point #2, I give priority to companies based in the United States, but give some weight to places that offer higher rates and free withdrawals.
1. Gemini for GUSD @ 8.05% APY
Gemini is based in the U.S. and is a highly regulated cryptocurrency exchange. It’s also the company that launched the Gemini Dollar (GUSD) token. Of all the crypto platforms, I trust Gemini the most.
Currently, they’re offering 8.05% APY on their own token and that’s where I plan to put the rest of my GUSD.
New Gemini users can also get a BTC bonus of $10 or $50 for opening an account.
2. Celsius for ETH @ 5.35%
Celsius Network is also located in the U.S. and the platform where I hold my Ethereum (ETH). It’s a large company used by many people and a safe option within the context of cryptocurrency.
With Celsius, you get an unlimited amount of free withdrawals.
3. Voyager for BTC @ 4.75%
Voyager is a publicly traded cryptocurrency platform founded in the U.S. in 2018 and offers 4.75% APY on your Bitcoin (BTC) holdings.
That’s actually a little lower than Celsius’ rate of 6.20% APY for BTC, but that’s okay with me. I prefer to diversify my crypto across several places to spread my risks. This is personal preference of course, but I don’t feel comfortable putting all my eggs in one basket.
New users can get a $25 BTC bonus using my Voyager referral code when they make a trade of $100 or more.
4. Hodlnaut for USDC @ 12.73%
Hodlnaut is a Singaporean fintech company that follows Singapore’s financial regulations. While it sits outside the United States, it deserves some attention as it pays an incredibly attractive 12.73% APY on USDC stablecoins.
Additionally, Hodlnaut accepts deposits and pays interest on Bitcoin (BTC), Ethereum (ETH), Dai (DAI), Tether (USDT), and Wrapped Bitcoin (WBTC).
It’s a legit company and is worth considering if you’re looking for a platform that pays a high yield on crypto. However, as the company is based in Singapore, U.S. residents will need to be okay with stepping outside of the protections provided by U.S. financial institutions.
You can join Hodlnaut for a $20 sign-up bonus paid in-kind and you’re provided with one free withdrawal per calendar month.
5. Ledger Nano X @ 0%
I hold the majority of crypto in my Ledger Nano X. It’s a hardware wallet that stores your crypto assets offline, which makes it virtually impossible for hackers to steal your crypto. Another popular cold storage wallet is Trezor Model One.
With these wallets, they’ll generate a seed phrase, which is a 24-word phrase that essentially acts as your private key. You should keep this in a secured location and never share the phrase with others. Anyone who knows your seed phrase can access your crypto assets.
Needless to say, don’t leave this out in the open. Hide it in a safe place. I bought this indestructible corrosion-free, fireproof steel card to write down my recovery phrase and store it in a bank safe.
While you don’t earn interest with this option, nothing is more valuable than having peace of mind knowing that a significant amount of your cryptocurrency is protected.
Some people start storing some of their crypto this way when their assets are worth $1,000 while others don’t bother until they have a lot more than that. It’s up to you to decide what you’re comfortable with.
The Bottom Line
Existing users may be upset that they can’t add more funds into their BlockFi Interest Account and new users may be disappointed that they can’t create a BIA, but I think this will be good for cryptocurrency adoption long-term.
I welcome more regulations because it forces companies to be more transparent. One of the reasons BlockFi got fined $100M is understating the risks associated with its lending activities, saying they were “typically” over-collaterized when most were not.
As investors, the more information we get before we make a financial decision, the better. I’m certain that the scrutiny will continue in this space and we’ll have to pivot as things evolve.
While this plays out, don’t forget there are other cryptocurrency opportunities to look into. There are many ways to earn free crypto, including taking advantage of sign-up bonuses on various exchanges and platforms.
And if investing in cryptocurrency isn’t for you, there are other great options that are fully backed by the government, like Series I Savings Bonds.