Blockfi, a New York-based provider of crypto-backed lending products has raised $18.3 million in a Series A funding round. Valar Ventures spearheaded this round, in which a host of other leading investors took part in. Reportedly, Valar Ventures is an upcoming VC firm led by Peter Thiel, Paypal’s co-founder.
According to a report, Thiel has been active in investing in the FinTech sector over the past few years. Before this investment, the billionaire backed Transferwise, a UK-based money-transfer business. In addition to this, he also backed two German FinTech startups namely N26 and Deposit Solutions.
Other firms that took part in Blockfi’s funding round include Morgan Creek, Galaxy Digital, and CMT Digital among others.
James Fitzgerald, a general partner at Valar Ventures noted,
Outside of all the hype and volatility of the crypto trading markets, there are teams, like BlockFi, that are building the infrastructure to allow investing in digital assets to become mainstream. We are excited to help BlockFi build robust ‘picks and shovels’ for this emerging asset class,
Blockfi Set to Expand Its Lending Platform
Per Blockfi, this new investment will help it create new products and double the number of its employees to 60. On top of this, the firm would use these funds to expand its current platform, which involves interest-earning accounts for BTC and crypto-backed USD loans.
This news comes after Blockfi rolled out its services in March this year. It offers these services to individuals and firms interested in taking crypto loans starting from $2,000 and going as high as $100 million. The platform supports BTC, ETH, and LTC and charges a 4.5 percent facility fee per for its loans.
At launch, the firm promised investors that its deposit accounts would earn them 6.2 percent interest annually. As a result, the firm received $25 million in deposits after it went live on March 5. By late April, Blockfi revealed that it had received more than $53 million in deposits from different investors. However, the monthly interest rates of deposit accounts are subject to change at Blockfi’s discretion. For instance, in the past month, the firm cut interest rates for accounts holding more than 10 BTC.
Explaining the need for such measures, Zac Prince, the founder of Blockfi said,
Because it’s a new market, there’s not going to be the same levels of protection or development that exists in markets that are backed by the federal government. Our job is to build these products, give individuals who want access to them an easy way to interact with them.
Before this funding round, Blockfi raised $52.5 million in a Galaxy Digital-led investment round. The funding involved a loan purchasing facility and equity investment. Other investors in this funding round included Kenetic Capital, SoFi, and Consensys Ventures.
Do you think Blockfi’s crypto lending services will attract mainstream firms to invest in crypto? Let us know in the comments below.