New York crypto lending firm BlockFi has announced a reduction of its initial interest account offer for accounts with more than 25 BTC or 500 ETH (equivalent to $100,000 and $70,000, respectively) according to a blog post published this week.
The lender made headlines earlier this month for offering up to 6.2% on both bitcoin and ether deposits, but will now pay large accounts 2% on deposits that exceed the limits. BlockFi will honor the 6.2% for large accounts on their full deposit through March.
The change in the offering comes amidst heavy demand for the product, which has added over $40 million deposits in 2019 and is up 400% since launching its beta in January. In a conversation with The Block, CEO Zac Prince said the firm saw unanticipated demand from crypto hedge funds and VC firms looking for yield, and reiterated that the interest account was always meant to be a retail-focused product.
"A key insight we gained is that approximately 75% of BIA clients have a balance of less than 5 BTC or 150 ETH. In fact, our median account balance is $7,000 USD," according to the blog post.
"We were surprised that some entities would deposit $10M at BlockFi without so much as a phone call and didn’t expect this type of behavior," said Prince.