BlockFi Promo: $250 Bonus with $20,000 Deposit + 8.6% Interest (ACH Transfers Now Available)

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Update: BlockFi now supports ACH to transfer funds electronically from your bank account to the BlockFi Interest Account. Both deposits and withdrawals are fee-free. There is currently a daily transfer limit of $500. Linking is done via the Plaid platform. Please see full post for details, but ACH transfers make this bonus much easier to complete and exit.

New promo, similar but slightly different. BlockFi is a cryptocurrency platform that both pays interest on deposits and earns interest via cryptocurrency-backed loans. Right now, they are offering an up to $250 in bonus Bitcoin for new clients that sign up and fund a new BlockFi Interest Account. Here are the bonus tiers:

  • Deposit $25 to $249, Get $15 in BTC.
  • Deposit $250 to $999, Get $20 in BTC.
  • Deposit $1,000 to $4,999, Get $40 in BTC.
  • Deposit $5,000 to $9,999, Get $75 in BTC.
  • Deposit $10,000 to $19,999, Get $150 in BTC.
  • Deposit $20,000+, Get $250 in BTC.

This must be your first deposit, and you must make the qualifying deposits within 30 days of account opening. The required holding period is roughly 3 months. For example, if you participate in the promo anytime in December, your bonus will be paid out March 15th. This one is an affiliate offer and you should see the promo code partner250 auto-filled on your application.

New BlockFi clients who sign up with a specific partner referral code and fund their account during the promotion period (current calendar month ending at 23:59:59 UTC on the last day of the month) are eligible to receive a tiered bonus paid in BTC. To be eligible for the promotion, this must be your first ever deposit in the BlockFi Interest Account, and you must maintain a $25+ crypto balance through the 14th of the month at 23:59:59 UTC two and a half months from the month of eligibility in order to remain eligible. Eligible payouts occur on the 15th of every month on a rolling basis. If the 15th falls on a weekend, then the payout will occur by the end of the next business day (ex. If you participate in the promo in December, your bonus will be paid out March 15th). This offer is not valid in conjunction with any other current or past promotions and the promo code on the account will be used to determine promo eligibility for new accounts. The bonus will be paid in BTC based on the prevailing market price at the time of payment. Payout will be based on your average daily balance (USD equivalent) maintained through 23:59:59 UTC on the 14th on the month you are eligible to be paid on. Any withdrawals made before 23:59:59 UTC on the 14th of the month you are eligible to be paid out on may affect your tier. BlockFi Interest Accounts are available in most countries worldwide and all U.S. states other than NY. There is a maximum of one bonus per client. This offer is not valid in conjunction. Terms subject to change.

Update 11/12/20: BlockFi now supports ACH transfers direct from your bank account with a $500 daily transfer limit, which is much less hassle than wire transfers. Now this promo is as easy as the $25 BTC Voyager promo. You just might have to initiate multiple transfers over days or weeks.

The BlockFi Interest Account (BIA) currently pays 6% APY on up to 2.5 Bitcoin (BTC) and 8.6% APY on USDC/GUSD stablecoins (subject to change on a monthly basis). There are no trade requirements, but when you deposit USD it will be converted to the GUSD (Gemini stablecoin) by default. (You can buy USDC or something else if you wish.) You could simply hold the stablecoin and earn interest until the bonus posts. Their overall business model is to earn a spread on the difference between lending out money and paying interest.

To earn interest on crypto, we lend assets to highly vetted and audited institutional counterparties. The interest we are able to pay is based on the yield that we are able to generate from lending, which directly correlates to the market demand in the space (I.e. what rate institutions are willing to pay to borrow specific crypto assets, as it varies from asset to asset).

BIA is available in 49 of 50 U.S. states (excluding New York). One free crypto withdrawal per calendar month and one free stablecoin withdrawal per month. After that, additional stablecoin withdrawals are $0.25 each.

BlockFi is definitely one of the more well-established crypto sites, but you should do your own due diligence as it is not an FDIC-insured bank account nor a SIPC-insured brokerage account. I found that they were backed by some reputable firms including Fidelity Investments and Coinbase, with over $100 million raised so far. They use Gemini as their primary custodian, which is a licensed custodian and regulated by the New York State Department of Financial Services. As such, they will still require your name, address, and Social Security Number to verify the identity of all accountholders.

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Comments

  1. Rudi Pittman says

    Could the square cash app be used to purchase Bitcoin or Satosis and then use that? It doesn’t mention a fee to do it.

  2. The fine print, however, says the following:

    “You must also have a valid promo code or receive a targeted email to be eligible for this promotion”

    https://try.blockfi.com/sept-usdc-offer/?irclickid=X1tzyDSpixyOW0W0EHQlB1XYUkiXrdTIExS7Rw0&irgwc=1&utm_source=Impact&utm_medium=29903&utm_campaign=10568&utm_term=890725&utm_content=TEXT_LINK#lp-pom-text-750

  3. Just thinking out loud here…doesn’t this seem too good to be true? 8.60% APY?!? Yeah, it’s 8.6% in internet money, but it’s internet money that is supposed to be backed by USD, dollar for coin. I’d transfer all my cash reserves if I was assured that I could get it back out again… Jonathan, I know you pointed out that the account is not FDIC nor SIPC-insured, but you also point out that it’s backed by some pretty big names in the industry. I don’t know whether I should transfer $10k, $100k, or pass altogether. What’s the catch? (and at 8.6% APY, shouldn’t there be one?)

    • I am far from a crypto expert and don’t want people to rely on me as such. This is a unique thing, not a bank and not FDIC-insured. There are multiple parts, and the research has been interesting to me. Will USDC stay at $1? Gotta go read about stablecoins. How does stablecoin lending work? Here is one example article. Will BlockFi give me my money back? Gotta read about BlockFi. Below an excerpt from their FAQ, but you should also look for negative stuff independently. I did so myself and didn’t find anything noteworthy. Please feel free to comment if you find something.

      Gemini is BlockFi’s primary custodian. To provide the highest levels of security to any assets safeguarded by Gemini, they keep a majority in cold storage wallets and only a small, operationally determined amount in hot wallets. These hot wallets are covered by an industry-leading insurance policy and the total value of assets stored there will never exceed that policy – this rebalancing is managed using both automated and manual controls. As a limited purpose New York trust company, Gemini Trust is a qualified custodian and regulated by the New York Department of Financial Services. Additionally, Deloitte completed a SOC2 examination of Gemini’s custody solution — you can read more about Gemini’s SOC2 compliance here and about their security here.

      To earn interest on crypto, we lend out assets deposited at BlockFi to vetted institutional counterparties. Our risk and finance teams work collaboratively to review all of our counterparties before they become a qualified borrower. You can read about how we generate our yield for our interest accounts here. Additionally, here is a great resource to learn more on the intricacies of our crypto lending market.

      Please also note that digital currency is not legal tender, is not backed by the government, and BIA accounts are not subject to FDIC or SIPC protections. This is not a risk free product.

      From what I can tell, you are buying an asset that is in demand for lending at the moment due to its unique qualities to certain institutions. You are not directly lending the asset, but BlockFi is, and they are paying you interest and promising that you’ll get back your principal as well. Kind of like a bank but without FDIC insurance, so you have to judge the quality of the business, which is hard for me to do other than see who else is giving them money.

  4. I believe you can do a free wire transfer if you have a Fidelity Online Cash Management Account . Save $20, might add a few days if you have to move money around

  5. I am glad you posted this article and got the conversation going among your followers. I don’t know if I was the first one who pointed out to you high interest rates on stable coins a couple of weeks ago. It is definitely worth considering. Also, it is important to note that Voyager pays a little more, it is currently 9%. And Crypto.com pays 12% but you have to jump through a few hoops to get that higher rate. That’s the one I am using.

  6. In essence what you have here is a company operating like a bank that uses fractional reserve banking, hoping that the depositors don’t all demand simultaneous conversion of their coins back to fiat money.

    For all the hype of stable coins, they’re really not all that stable after all. Users of the currency once again have to trust that the stable coins will remain fully backed by something that can be converted to cash without any losses.

    Exactly what is BlockFi using? Loans? Anything else? What happens when the some of those loans aren’t paid back? What do you think?

    • What do you mean “loans aren’t paid back”? It is a secured loan, there is collateral held at BlockFi. Just like in a margin brokerage account, if the value of the collateral goes down, they would sell your collateral to pay back the loan. Didn’t they hire a top risk management guy from Merrill Lynch? I am glad we are discussing this and I could be wrong. The more people look at this platform, the better. I hope we get more opinions on this. Jonathan, what do you think?

    • I’m not sure what you mean by fractional reserve banking. That would mean they lend out more stablecoin than they have in deposits, or that the stablecoin is not backed 100% by US dollars. I don’t think either is the case here, as long as you believe the audits.

      I do agree that there is company risk here. You have a company accepting deposits and paying interest and lending it out for (more) interest. Things can go wrong, and this is not the same as an FDIC-insured bank account. The question is if the risk/reward balance is acceptable to you, given the time horizon.

  7. Nick:
    First of all loans and common stock are not the same thing.

    You can’t just call your broker and sell a loan, there is no organized secondary market for most loans because when you sell most loans its an over the counter market and it could take weeks or months or maybe never to sell it because no body wants it if it goes bad or maybe has a skipped payment or two. Not unless you discount it by 50% or something like that. Talk to a mortgage loan broker and see what they say.

    So they have a guy from Merrill Lynch. He’s probably just window dressing.

  8. Jonathan,

    I was referring to a FDIC insured bank.

    BlockFi is not backing their stable coin with just dollars and nothing else, they claim to back them up with loans that are supposedly easily converted into dollars and that is not the same thing.

    BTW who are they making all those loans too? The borrower puts up collateral. But what is the collateral? Some other cryptocurrency? For all you know, if you could trace it all the way back, it might lead right back to…BlockFi, just like a global daisy chain?

  9. Joe, thank you for your response. I am glad we have a debate going. I want to get a better understanding of it myself because I view it as a huge opportunity. They are revolutionizing the finance/banking industry. We are getting paid less than 1% on our cash in bank accounts and these platforms pay 10% on average. This is a huge market shift. And if it is as legit as they say it is, then this is a great opportunity for all of us.

    As far as the notion of collateral. Let’s say you open a margin brokerage account and deposit your assets there, such as cash (USD), stocks, bonds, gold (GLD). Your broker will give you cash against those assets at 9%. For every dollar I deposit, I get up to 3 dollars to borrow. Same thing with these platforms. You deposit your BTC, ETH, etc and you get a loan against those assets. What are the risks here? Same as a brokerage account. If your assets go down in value, you get a margin call and you have to deposit more assets right away or they start liquidating your portfolio to meet loan-to-asset value ratio. I assume same thing here, you have to deposit more assets or they will start selling your BTC to manage their risk. That’s why they hired the top guy in the industry to do their risk management.

    By the way, I am not affiliated with BlockFi and I am not even using the platform at the moment. I saw this article too late to get $250 bonus. But next time they have such a promotion, I am planning on taking full advantage of it. In the meantime, I am making 12% a year at a similar platform.

    These guys are also planning to release a rewards credit card this fall as well as other great products. This is very exciting and I hope their plan to revolutionize the finance industry becomes successful. Being an early adopter, I am being nicely rewarded. These rates most likely won’t stay at 12%, but even at 6%, it is 10 times more than what you get at your bank.

    Looking forward for Jonathan or anyone else’s input. This is a good discussion and we can all benefit from it either by earning a lot of cash on these platforms or by not loosing our hard earned money if it really turns out to be a ponzi scheme.

  10. Nick

    Before there was FDIC what happened to a bank if too many depositors showed up and demanded their money? They either got bailed out by some other bank or maybe a wealthy individual or they went bust.
    The Block Fi model is almost the same thing. They just aren’t using dollars, instead they are using what is basically a digital product that acts like a commodity and is called a cryptocurrency. And there is no limit on their number despite what the manufactures say, they can always make more and how would anyone know if that were the case? Just because they say there’s a limit doesn’t mean there is one and they can also just manufacture a new “stable” coin. And isn’t that how Block Fi came into existence? And then just start using that.

    As for the “assets” backing it up I didn’t notice anything about initial margin but maybe I am wrong about that? But if it’s 50% like it is at a stock brokerage firm then they don’t really have every stable coin backed up by one dollar. Does anyone know what is the maintenance margin at Block Fi? Most stock brokerages want at least 25%. But in either case that doesn’t equate to one dollar for every stable coin.

    I agree we need to keep this discussion going. I hope other people will join in.

  11. In terms of withdrawing from BlockFI, if you want to withdraw stable coin balance to a bank account via wire, there is another $20 fee for the outgoing wire from BlockFI. Is the better method to transfer from BlockFI to coinbase and then withdraw? The current interest rate they are offering on holding GUSD is tempting, but a wire only option to withdraw and the $20 fee makes it seem less convenient

  12. This quote comes from the Block Fi.
    “What that means is, if we are lending $1M worth of BTC to Firm XYZ, Firm XYZ collateralizes the loan (typically ~120%) by giving us ~$1.2M USD. If the loan were to then enter margin call and the borrower was unable to provide additional collateral (default), we would use their USD collateral to buy crypto.”

    So then the maintenance margin is just 20%.

  13. Update: they are now offering a “beta trial” of ACH withdrawals. If that comes to fruition, it will relieve a pain point

  14. $500/day ACH limit? So it will only take 40 days to transfer $20k? Not really understanding how that saves this.

    • That’s true, although there are lots of deposits tiers below the $20k tier that would be hit much harder by a $20 wire fee. Hopefully by the time it is time to withdraw, they will have raised the limits since this is in Beta.

    • I think it’s useful if you decide to keep this around to collect interest, but want to withdraw some of that. Depending on your others accounts, you can wire funds in for free. Keep the account, withdraw $500 interest by ACH, and whenever you are done, withdraw large amount by wire and eat $20 fee

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