The update revealed that as from June 1, all BlockFi Interest Accounts (BIA) on the platform with Bitcoin (BTC) balances above 25 BTC will see a 0.15 percent increase in their interest rates (jumping from 2 percent to 2.15). Accounts with Ether (ETH) balances between 25 and 75 ETH will also reduce from 6.2 percent to 3.25 percent in Annual Percentage Yield (APY).
However, it also pointed out that BIAs holding balances of over 100 ETH will get just 0.2 percent APY, while BTC accounts with 0.2-25 BTC will get 6.2 APY. Tuesday’s announcement further revealed that there has been almost a 100 percent jump in the value of assets in the BIA, as they moved from $53 million in April to over $100 million
As for its reasons for implementing this recent change, BlockFi pointed out that there has been an improvement in the lending environment for BTC, while that of ETH hasn’t been performing so well. The company pointed out that various other lending firms and asset managers have made adjustments to their interest rates, and it was just doing so in response to an industry-wide action.
The BTC and ETH accounts provided by BlockFi were launched back in March, and as at then, all accounts running on both crypto assets carried a 6 percent APY. However, the company went on to lower its interest rates less than three weeks later, announcing in March that as from April 1, all accounts with balances up to or including 25 BTC or 500 ETH will continue to earn the 6.2 percent APY, while all accounts with balances over those thresholds will earn APYs of just 2 percent.
The company has come under consistent criticism from the community following its terms of conditions, which allows the firm to change its interest rates at its sole discretion.
The company, which is backed by companies such as merchant bank Galaxy Digital and investment manager Morgan Creek Capital Management LLC., announced that all clients’ assets would be kept safely with the custodial arm of the Gemini Trust Company, which is regulated by the New York State Department of Financial Services. As is expected, customers can withdraw their assets when they please.
Still, that change didn’t seem to affect a vast majority of the company’s account holders, as it claimed that almost 75 percent of its clients had balances of less than 5BBTC or 150 ETH in their accounts, while the median account balance of users on the platform was about $7,000.