BlockFi Review: Safe & Worth It in 2022? | Dollar Bureau

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BlockFi Review: Is It Safe and Worth It To Use in Singapore and Globally?

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blockfi review

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Launched in 2017, BlockFi is a crypto exchange platform that offers a host of features, including a crypto wallet, crypto trading, interest-based earning, and more.

Most of BlockFi’s features are available worldwide (except in the US), making it one of the best crypto exchange platforms for advanced users.

BlockFi also offers a loan service that you can borrow against your current crypto holdings; this allows you to hold on to your coins instead of selling when the market is down.

But do these advanced features really live up to their reputation?

In this article, we will discuss all of BlockFI’s main features and fee structure to help you decide if it’s right for you.

So without further adieu, let’s get started!

BlockFi Features

With BlockFi, you may borrow money in USD and, at the same time, earn interest on your crypto holdings.

Here is a detailed breakdown of all the features that the BlockFi crypto exchange platform has to offer.

BlockFi DeFi Wallet

BlockFi recently launched a wallet to safeguard all your crypto holdings.

You can buy, sell, trade, and hold both cryptocurrencies and stablecoins in your BlockFi wallet in a safe location.

BlockFi wallet is well known for its security features which makes it extremely difficult for hackers to break into.

There is no minimum balance to create a free BlockFi wallet, and you can also store different rewards you get into your BlockFi wallet.

One thing to note, your crypto holdings held in the BlockFi wallet will not be eligible for any interests.

If you want to gain interest from the crypto holdings, you have to put it into a separate BlockFi interest account (more on that later).

BlockFI wallet also comes bundled with advanced security features, like two-factor authentication (2FA) and an allow-listing feature that protects your crypto so that you can only make withdrawals from approved, whitelisted addresses.

BlockFi wallet also offers an intuitive user interface that lets you buy, sell, and trade crypto from the wallet app.

You can make instant trades and exchanges with Instant Bank Transfers (ACH) without having to leave the wallet app.

BlockFi wallet also comes with a detailed report which can greatly help you to keep track of all your crypto transactions.

You can also pay 1099-MISC directly from your BlockFi account (for the USA only).

Crypto Loans

As previously discussed, one of the BlockFi signature features is the ability to borrow USD against your crypto holdings at reasonable interest rates.

This feature is particularly useful for advanced crypto traders who may need urgent cash for investment but do not want to sell off all their current crypto holdings, especially when the markets are down.

The minimum loan amount is US$10,000 or equivalent in your local currency.

This is also a secured loan, meaning you must pledge collateral to approve the loan.

The amount of collateral will depend on the current market price of your crypto holdings, but it usually ranges from 20% to 50% LTV (loan to value ratio).

The amount of crypto you choose to use as collateral will thus affect the interest rate you pay.

Your interest rate will be better the lower your LTV is. The quantity of your loan and where you reside are other considerations in determining your interest rate.

BlockFi also does a great job of breakdown the interest rates and collateral you may have to pledge, and there are no hidden charges you have to worry about.

As of June 2022, you need to pledge 1 BTC ($17,000) to get $10,200 in loan with an interest rate of 4.5%.

However, one important thing to note, not all coins can be pledged as loan collateral.

Currently, only BTC, ETH, or LTC can be pledged to get loan approvals.

The interest rate is the same for all, starting at 4.5% annually.

BlockFi loans are available in Singapore and most other countries without a sanction.

BlockFi Interest Account (BIA)

BlockFi interest account (BIA) is a unique account that lets you earn interest for your crypto holdings.

As we previously stated that keeping your money in your BlockFi wallet will not earn you any interest.

You must keep your holdings in the BIA account and have one of these selected coins to be eligible for interest.

  • BTC
  • ETH
  • LTC
  • USDC
  • GUSD
  • PAX
  • Solana
  • Doge

 

Interest rates vary drastically and range between 4.5% to 16%.

One major advantage of the BlockFi Interest Account is that there is no minimum balance you need to hold to be eligible for interest.

And interest is paid daily, so you do not need to worry about any monthly cycles.

BlockFi interest accounts also do not have hidden charges and fees for you to be concerned about.

Unfortunately, the BlockFi interest account is currently NOT available in the USA but has full support in other parts of the world, including Singapore.

BlockFi Reward Card

Another feature we really love about BlockFi is the Visa BlockFi Reward Card.

Similar to cash-back credit cards, BlockFi reward cards come with a variety of incentives and cash rewards for shopping.

You can earn 1.5% back in any cryptocurrency, and on spending more than 30,000, you will get a flat 2%in return.

The BlockFi reward card has no annual fees, reward cap, or foreign transaction fees.

BlockFi also promises to collaborate with major brands to provide up to 10% discounts on selected products.

For those who are already invested in crypto, the BlockFi Visa reward card can be an excellent option.

Despite how good it is, we still prefer Crypto.com’s Visa Cards.

BlockFi Crypto Exchange

BlockFi also offers a crypto exchange where you can trade cryptocurrencies.

The number of crypto coins supported in BlockFi’s exchange is rather limited.

Currently, only 40 coins are supported, which is far less than other established crypto exchanges on the market.

Some of the supported coins are listed below:

  1. Bitcoin
  2. Ethereum
  3. Litecoin
  4. Chainlink
  5. USD Coin
  6. Gemini Dollar
  7. PAX Dollar
  8. Binance USD
  9. Tether
  10. PAX Gold
  11. UniSwap
  12. Dai
  13. Basic Attention Token

 

BlockFi also has no supported fiat currency.

When you deposit in your BlockFi account, it simply converts your deposit into stablecoins like USDC.

For withdrawal, it’s the same process. Your wire transfer to the local bank will be converted to your local currency from USDC.

Although the number of coins is limited, one thing going for BlockFi is that the coins they do support are the most popular ones that most people actually trade.

Fees

BlockFi is well known for offering a transparent fee structure.

Let’s break them down in detail for better clarity.

Deposit Fees

BlockFi does not charge any fees for depositing money.

However, when you deposit money using a debit card, there may be a fee deducted by your bank.

It is also important to note that because BlockFi does not support any fiat currencies, it will be automatically transferred to a stablecoin which you can then use to invest in other coins.

To deposit using your card or directly via wire transfer, head over to the top navigation bar and find the “select option.”

You will then be prompted to “select payment methods” and pick your preferred deposit mode.

Withdrawal Fees

There is both a minimum withdrawal limit and withdrawal fees on the BlockFi platform.

The minimum amount you can withdraw for different currency are listed below:

Cryptocurrency Minimum Withdrawal
Bitcoin 0.0000274 BTC
Ethereum 0.0000001 ETH
Litecoin 0.0000274 LTC
Chainlink 0.0000274 LINK
USD Coin 0.0000001 USDC
Gemini Dollar 0.01000 GUSD
PAX Dollar 0.0000001 PAX
Binance USD 0.0000001 BUSD
Tether 0.000001 USDT
PAX Gold 0.0000001 PAXG
UniSwap 0.0000001 UNI
Dai 0.0000001 DAI
Basic Attention Token 0.0000001 BAT

The withdrawal fees and limits are given below:

Cryptocurrency Withdrawal Limits Withdrawal Fees
BTC 100 BTC per 7-day period 0.00075 BTC
LTC 10,000 LTC per 7-day period 0.001 LTC
GUSD, USDC, BUSD, PAX, DAI, USDT 1,000,000 per 7-day period 50 USD
ETH 5,000 ETH per 7-day period 0.015 ETH
LINK 65,000 LINK per 7-day period 2 LINK
PAXG 500 PAXG per 7-day period 0.035 PAXG
UNI 5,500 UNI per 7-day period 2.5 UNI
BAT 2,000,000 BAT per 7 day period 60 BAT,

Take note that BTC, LTC, GUSD, USDC, BUSD, PAX, DAI, and USDT are eligible for one free withdrawal each month.

After that, you’ll incur the fees above.

Customer Service

One key indicator for a good crypto exchange is how well it can address customers’ problems.

BlockFi offers several ways for you to contact customer support, including making a quick phone call and creating a ticket through email or chatbot.

BlockFi also has a social media team where you can reach out to them.

Response time varies from a couple of hours to a few days, but you can rest assured the team will definitely address your problem.

But how fast they reply is just half the story because what mostly matters is if the customers are happy with the support or not.

If you are following our blog and have seen our other cryptocurrency exchange reviews, you will be familiar with seeing terrible Trustpilot reviews.

But BlockFi is one of the few crypto platforms out there with above 3.5 out of 5 stars across over 250 user reviews.

This clearly suggests the impeccable customer support that is provided by the BlockFi team.

We checked some of the reviews that customers had to say about BlockFi, and they were mostly positive.

But there are some reviews alluding to the fact that BlockFi blocked their account without any reason, and they were unable to make withdrawals.

There are also several instances where customers claim that Blockfi is illiquid, meaning there is a very low amount of activity and therefore is unable to make instant payouts to customers.

Because these are isolated cases, we reached out to BlockFi to see what they have to say on the matter to BlockFi support and have got a bunch of automated replies that did not answer our query.

BlockFi Automated Replies

We also reached out to them via Twitter and currently waiting for a response.

Trading Experience

Crypto can sometimes be a bit complicated and overwhelming, especially for those with little to no idea about cryptocurrencies.

Therefore, it is vital to create a trading experience that is consistent and easy to use over both mobile and desktop versions.

BlockFi comes with a simple but detailed dashboard to keep track of all your tradings.

BlockFi also supports a full-fledged mobile application that lets you keep track and make crypto transactions on the go.

You have access to the same detailed dashboard, so you won’t be missing out on features whether you are on your phone or on a desktop.

BlockFi has an easy-to-understand and well-thought-out interface, which most will be able to figure out themselves.

But if you are having trouble navigating through the UI, there are many helpful tutorials and forums for you to look into.

Overall, for those used to using financial apps or an online brokerage account, the trading process is generally simple.

Is BlockFi Safe?

Security is an important aspect when it comes to choosing a cryptocurrency exchange.

The key selling feature of BlockFi is to help you get loan approval in USD, which you can take against your crypto holdings.

Therefore it is important that BlockFi ensures complete security of your holding; otherwise, they too will incur a loss.

BlockFi is based in New Jersey, USA, a country that is well known for its strict privacy and security policy.

However, BlockFi accounts do not have any SIPC or FDIC insurance that most other financial companies in the US possess.

This means BlockFi will not be as safe as other financial organisations.

This should not be a big problem as most cryptocurrencies are not FDIC approved anyway, and BlockFi has several security features in place to protect your holdings.

It stores around 95% of the crypto in a cold wallet which is off the grid and can not be accessed by hackers easily. The rest, 5%, are in the hot wallet.

BlockFi also has several other security features like two-factor authentication and allows listing before gaining access to your account.

The chances of your BlockFI account getting hacked are, therefore, fairly low.

But this does not mean it is totally immune to data breaches.

A recent hack took place in Hubspot, and hackers were able to gain intel about customers’ BlockFi accounts.

In an investigation, Hubspot confirmed that around 30 customers had their personal data leaked.

It is still unclear what the intentions were, and although the data breaches happened on a Hubspot and not on BlockFi itself, it is still a reminder of how susceptible our online presents are.

There is another developing story where hackers got hold of users’ personal data by compromising an employer’s phone.

They used a sophisticated SIM swap attack to bypass the authentication process and gained access to some retail marketing systems.

In an official statement, BlockFi reassures that the intruder only had minimal access and no funds were transferred.

But this is still developing news, and we have to keep an eye on how the story unfolds.

BlockFi Security Measures

BlockFi claims its platform has not been hacked because of system variabilities, but crypto exchanges continue to be a lucrative target for hackers for massive financial gains.

It is therefore important to know the security measures BlockFi has in place as precision.

Identity verification

To ensure that the platform is safe for all and not exploited by scammers, BlockFi verifies each customer with a government-issued photo ID.

You may also be required to post a selfie with your valid ID for authentication.

Required documents to open an account in BlockFi (United States)
  • State-issue IDs (Driver License or Identification Card)
  • US Passport

 

Required documents to open an account in BlockFi (Outside of the US)
  • Government-issued photo ID
  • National Identity Card
  • Passport

 

Biometric authentication

BlockFi also supports biometric authentication for safer and fast logins.

For additional security, after an hour of logging in or after closing the app, you have to re-authenticate with your face ID.

Biometric authentication is also independent of email and password and, therefore, harder for hackers to crack and access.

Two-factor authentication

For securing your online accounts, (2FA) is the industry standard.

Your BlockFi account is given an additional layer of security once 2FA is enabled.

You will be required to enter both your password and a verification code generated by your authenticator app when you log in.

BlockFi is also compatible with Google Authenticator and is available on both Android and iOS for additional security.

Allowlisting

One interesting feature in BlockFi is called “Allowlisting,” which makes sure that only known withdrawal addresses may receive crypto from your BlockFi account.

Allowlisting also enables you to either restrict all crypto withdrawals or limit them to a select group of addresses you pre-approved.

Any attempt to withdraw money from another account will be restricted.

This allows for additional security, and even in case of data breaches, hackers will not be able to withdraw money from their accounts.

Recent issues on BlockFi

There have been some recent complaints issues that BlockFi failed to address.

The SEC stated in a press release that BlockFi failed to fulfil the requirements of the registration provisions of the Investment Company Act of 1940.

This act regulates the organisation of businesses, such as mutual funds, that focus on buying, selling, trading, and offering securities to investors.

To settle charges, BlockFi agreed to pay a $50 million penalty to the SEC.

BlockFi also agreed to pay an additional $50 million in fines to 32 other states to settle similar charges.

BlockFi is cutting 20% of staff

In recent news coming from BlockFi, the company expects to cut more than 20% of its current workforce.

This is to cut costs amidst the current crypto turmoil and all the uncertainties that have been circulating around the world.

BlockFi also stated that it would also cut marketing settings and lay off “non-critical vendors,” and cut executive pay in an attempt to make the company profitable.

A large part of this also comes from the credit crisis that’s affecting the crypto markets that have affected Celsius, Three Arrows Capital, and other loan-based crypto companies.

Many claims that BlockFi is illiquid or is at risk of not having enough liquidity.

Because of this, the FTX crypto exchange has extended a US$25 million offer to buy out BlockFi – a 99% discount from its last valuation.

However, BlockFi has denied that they will be accepting this offer.

This story is also building up and we’ll have to see how it goes.

BlockFi quick summary, is it worth your time?

Now that we have discussed the services, fees, and current issues circulating BlockFi, let’s find out if it’s worth using?

BlockFi is a big name for crypto loans and is available in many countries, including Singapore.

BlockFi gives you access to get a quick and easy loan by pledging your current crypto holdings.

This is particularly useful when you are forced to sell your assets when the market is down.

This makes BlockFi a great option for advanced traders who are constantly looking for new opportunities.

But it’s not always a smooth ride for BlockFi. Recent controversies, especially the US$100 million fine by SEC, may trigger a chain of other restrictions and fines.

The Monetary Authority of Singapore (MAS), which supervises all financial organisations in Singapore, is expected to bring new regulations that may impact BlockFi and other crypto exchanges in the country.

To conclude, we think BlockFi is a risk at this point of writing, and you should look into other platforms that are sustainable.

In fact, we think you should avoid loan-based crypto platforms for the time being as there are a lot of uncertainties right now.

If you’re considering BlockFi as a crypto exchange, we think it’s best to opt for one that’s more stable right now – Crypto.com and FTX.

Disclaimer: Each article written obtained its information from reliable sources and should be purely used for informational purposes only. The information provided by Singapore Financial Planners and its affiliated parties is not meant to be construed as financial advice. Singapore Financial Planners shall not be held liable for any inaccuracies, mistakes, omissions, and losses incurred should you act upon any information listed on this website. We recommend readers to seek financial planning advice from qualified financial advisors. 

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