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BlockFi Loans: How They Work

Published, 16 May, 2018

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The first step of our Top Secret Master Plan is to become the leading USD lender in the cryptoasset market. And our first product is a USD denominated loan enabling holders of Bitcoin and Ether to get cash — without selling their cryptoassets.
In this post, we will break down the benefits of a BlockFi loan, the steps to get a loan and important considerations in terms of the loan structure.
How It Works
When we started BlockFi, we knew we wanted to create a better, simpler lending process. That’s why we offer the fastest, most hassle-free application process in the market. Here’s a bit more about how borrowing from BlockFi works.
Applying for a BlockFi loan takes less than two minutes and no membership or tokens are required to apply and receive a loan offer.
  1. First, choose what type of cryptoasset — 
     — you’re putting up as collateral, and either the collateral amount you would like to deposit or cash amount you would like to receive.
  2. Provide your email address and click “Get Started”. We will send you an email to validate your email address and start your application.
  3. Tell us a bit more about yourself.
    Note: You’ll need to provide some personal details and information on the nature of your loan including — 
    name, address, DOB, phone #, SSN, source of your crypto being used as collateral, reason for loan, wallet public key, bank information
    .
  4. After you review the information and submit your application, you will receive a loan decision or offer within 24 hours.
  5. Once you review your offer and sign the loan agreement, send your cryptoassets to our secured storage address and we’ll send the funds to your bank account.
  6. Make interest-only payments on a monthly basis, with a final payment of principal at the end of the term — which is a maximum of 12 months. We keep things flexible, so you also have the option to prepay or refinance at the end of the term. We also accept payments in cryptoassets — BTC or ETH — or US dollars for your convenience.

Benefits

A BlockFi loan is a term loan, where cryptoassets are used as collateral. BlockFi’s loans are general purpose loans, meaning they can be used for a variety of purposes including: to purchase additional investments — equities, bonds, real estate or other crypoassets — or to cover personal financial needs, including general expenses or paying off high-interest credit card debt.
A BlockFi loan offers several benefits to both individuals as well as corporations. Some highlights include:
  • Liquidity
    With a BlockFi loan, you receive USD liquidity while still holding on to the upside potential of your cryptoassets. Rather than selling your cryptoassets to get USD, you can put Bitcoin or Ether up as collateral to get access to the fiat liquidity you want.
  • Competitive interest rates
    We offer the best terms in the industry for borrowing USD against cryptoassets, including the lowest interest rates and monthly payments.
  • Tax benefits
    Taking out a loan from BlockFi is not a taxable event on gains that have accrued in your cryptoassets. Additionally, interest charged on a BlockFi loan may be tax deductible against your net investment income depending on how you use the proceeds of the loan.
  • Credit score impact
    Many lenders perform a hard inquiry when evaluating your application for credit, which can negatively impact your score. BlockFi does not pull a credit report at any time during the application process.
  • Security
    BlockFi keeps your assets safe via a partnership with Gemini, a depository trust and licensed custodian that has institutional quality cryptoasset storage capabilities. You’ll be able to view the collateral posted in your BlockFi account at anytime.

A word about your collateral value

Loan to value ratio is calculated as Loan Amount divided by Collateral Value. We lend at a 35% initial loan to value ratio because our risk modeling determined that this is a sufficiently conservative rate — in order to have a limited number of expected trigger events and provide our clients with breathing room in the event of market volatility.
Our platform monitors fluctuations in the value of your cryptoassets by the minute. Should prices drop materially, we have notification triggers in place to protect you and your cryptoasset position. We will always keep you in the loop through automated communication via your preferred channel(s). For more information on rates, loan-to-value ratios, and payments, read more here.

We’re proud to offer the best rates, most flexible structures and highest degree of security available in the cryptocurrency lending ecosystem.
If you have any questions or would like to learn a bit more about BlockFi, please don’t hesitate to reach out. We couldn’t be more excited at the prospect of working with you! ? The BlockFi Team

Last updated on February 4th, 2021

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Digital currency is not legal tender, is not backed by the government, and crypto accounts held with BlockFi are not subject to FDIC or SIPC protections. Digital currency values are not static and fluctuate due to market changes. Not all products and services are available in all geographic areas and are subject to applicable terms and conditions. Eligibility for particular products and services is subject to final determination by BlockFi. Rates for BlockFi products are subject to change.
See BlockFi.com/terms for more information.
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Digital currency is not legal tender, is not backed by the government, and crypto accounts held with BlockFi are not subject to FDIC or SIPC protections. Digital currency values are not static and fluctuate due to market changes. Not all products and services are available in all geographic areas and are subject to applicable terms and conditions. Eligibility for particular products and services is subject to final determination by BlockFi. Rates for BlockFi products are subject to change.
See BlockFi.com/terms for more information.
2021 © All Rights Reserved.