BlockFi is Bringing Back Yield Product, But There’s a Catch

BlockFi was one of the lenders that found itself in troubled waters following the crypto credit crisis. As forced selling and liquidity issues began to take a toll on investors, the industry, which was already buffeted by inflation and other macroeconomic agents, witnessed several companies, including Celsius and Voyager, go bankrupt.

But BlockFi managed to stay afloat, thanks to its acquisition agreement with Sam Bankman-Fried’s FTX. The company is now back in the crypto yield business. But this time, only for accredited American investors.

BlockFi Yield for Accredited Investors in the US

BlockFi announced that only US clients verified as accredited investors will be allowed to rake in interest on digital assets – BlockFi Yield. According to the official blog post, the new product will first be available in beta to certain clients in the country by the end of 2022 before opening it for all US-based customers at the start of 2023.

The firm described the yield as “competitive,” offering rates on 15 different cryptocurrencies. Following the development, BlockFi Founder and COO Flori Marquez said,

“As we continue to diligently work towards registration with the SEC for a public offering for BlockFi Yield, we are delighted to share that US clients verified as accredited investors will soon be able to earn interest on digital assets at BlockFi.”

Notably, the financial service company previously agreed to terminate a yield-paying crypto product after the Securities and Exchange Commission (SEC) deemed such an offering illegal. The new product was formerly known as BlockFi Interest Account, for which it had coughed up $100 million in fines to federal and state regulators in February this year.

The company then reached an agreement to cease offering yield products to US retail investors but not accredited institutions. BlockFi said the new product will be offered through an exemption from the registration requirements of the Securities Act of 1933.

FTX Purchase

BlockFi near collapsed after a raging bull run last year. It entered into an agreement with cryptocurrency exchange FTX in which the latter provided BlockFi with a $400 million credit line.

FTX also has the option to acquire BlockFi “at a variable price of up to $240 million” in the future. This, however, will be based on “performance triggers.” It also laid off 20% of its employees amid the market downturn.