Crypto lending firm BlockFi has raised $50 million in a funding round led by Morgan Creek Digital—with Winklevoss Capital, two university endowments, and the NBA player Matthew Dellavedova among the participating investors.
The company allows consumers to use digital assets as collateral for loans, without having to sell their cryptocurrencies. Borrowers can receive a dollar amount that’s equivalent to 50% of the virtual currency’s value, accounting for the risk of volatility.
BlockFi also provides crypto savings accounts that deliver monthly interest payments. As an example, someone who deposits Bitcoin would earn interest in the same cryptocurrency.
In total, the U.S.-based fintech company has managed to raise almost $100 million in the space of 12 months. Its Series A funding round last August generated $18.3 million in capital, and this was followed by $30 million in Series B funding back in February.
Announcing the successful fundraising in a blog post, BlockFi said the funds will be used to grow its team and further expand its product range. A credit card that offers Bitcoin rewards is in the pipeline, and there are plans to support a broader range of digital assets.
The cash injection comes as the decentralized finance sector continues its extraordinary surge. Figures from DeFi Pulse show that the total value locked in DeFi Protocols has risen by 250% since July 1, from $1.88 billion to $6.55 billion (although some questions were raised today about the validity of those numbers). Over the same period, the decentralized oracle network Chainlink has seen its market cap balloon from $1.6 billion to $5.8 billion—rapidly overtaking the likes of Litecoin, Bitcoin Cash, and Bitcoin SV.
BlockFi said that its revenue has grown tenfold over the past 12 months, meaning the company is on track to hit $100 million over the next 12 months. It also claimed that its lending portfolio has enjoyed a 0% loss rate since launch. Founder and CEO Zac Prince said:
“The past 12 months at BlockFi have been nothing short of amazing, and if anything, it’s a testament to the staying power of Bitcoin and other digital assets. With the support from our partners, we’re creating a platform for investors where they aren’t investing in just digital assets anymore—they’re investing in the future, greater financial empowerment and accessibility.”
As reported by Modern Consensus last month, BlockFi is looking for a chief financial officer who would have the necessary experience to take the company public next year. Although a formal appointment in that role is yet to be made, the business said it has recently bolstered its leadership team.
Chief growth officer Wittney Rachlin has joined after spending a career at American Express and Prudential, while general counsel Jonathan Mayers previously worked for the likes of Barclays and Deutsche Bank. David Olsson, BlockFi’s new managing director across Europe and Asia Pacific, used to be in the employ of Credit Suisse and Merrill Lynch.
With today’s news, Morgan Creek Digital’s Anthony Pompliano announced he was joining BlockFi’s board of directors.
‘Bringing cryptocurrencies mainstream’
BlockFi is clearly riding a wave of newfound momentum when it comes to digital assets. Last month, Deloitte’s 2020 Global Blockchain Survey revealed that 83% of respondents believe they could serve as an alternative to fiat currencies within five to 10 years—or replace coins and banknotes altogether. This is a sentiment that was echoed by BlockFi co-founder Flori Marquez, who said:
“Bitcoin, ether, digital assets, cryptocurrency, blockchain – words that years ago were considered a pipedream are now more acceptable investment options to safeguard wealth at a time when traditional market performance doesn’t even make sense to analysts.”
Sterling Witzke, a partner at Winklevoss Capital, added:
“Since launch, BlockFi has demonstrated an incredible ability to build crypto-focused fintech products that resonate with both retail and institutional customers. We look forward to supporting the BlockFi team as they launch their next iteration of products and continue to drive mainstream adoption, firmly cementing crypto at the core of the future of finance.”
Ultimately, BlockFi is hoping to “broaden the appeal of crypto-based investment” and improve the experience offered to retail and institutional clients. Other big names in the finance world are vying to do the same, with the major Japanese bank Nomura recently teaming up with Coinshares and Ledger to launch a new crypto custodian service called Komainu.
There has also been a publicity blitz in the mainstream media promoting the benefits of Bitcoin and other cryptocurrencies, with Grayscale Investments and Galaxy Digital both launching high-profile advertising campaigns in the Financial Times and on prominent business news channels.