Nishant KBlock Fi’s market condition amidst the crypto implosion.
Picture Credits: Business Standard
The crypto implosion caused a lot of stir in the operation of the crypto lending company Block Fi. The company took many hard decisions and steps to counter the prevailing market conditions. The persistent down fall of the market was a serious issue not only for Block Fi, but all the companies in the world that were dealing cryptocurrency and any digital asset.
Block Fi’ resorted to laying-off of at least 20% of its work force to cut the costs. The decision came as a shock for the employees. The company remarked that, the decision was to power the company and fuel them with necessary funds to battle the market. According to the reports, they also liquidated a big hedge fund’s listing to withstand the market. Now after resorting to all the measures stated above, Block Fi has come with another step which would be constraining investors even further.
Rise is deposit rates and elimination of free withdrawals by Block Fi.
After the crypto lending company got a credit of $250 Million from FTX, it made a remarkable announcement that, the deposit rates are going to be surged across the various cryptocurrencies. It also went on to announce that, the policy of free withdrawal officially comes to an end. A new policy, with minimum withdrawal fee will initiated. Both the new policies are going to be effective from July 1.
Factors reasonable for such steps.
Block Fi reasoned out three major factors which influenced the company to take such a decision.
- Risk Management: The company boasted that its historically conservative rate approach had given them the flexibility to provide consumer benefits throughout this market downturn.
- Decreasing Market Competition: While some have slowed down or stopped those operations, BlockFi said that “we’ve maintained 100% uptime of our retail platform and institutional loan desk.”
- Macro Environment: Regarding the evolving macroeconomic climate, BlockFi pointed out that the sharp increase in U.S. Treasury yields is driving up loan rates and, by extension, deposit rates.
Block Fi’s reason for setting up a minimum withdrawal limit is that, in 2022, until now, at least 75% of the crypto withdrawals have been honored with out any fees. The crypto company claimed that it was subsidizing this cost for our clients. The current market situation is influencing more and more investors to withdraw from their investments made, and as a result the demand for withdrawal has increased and to cover all the honoring costs, we have decided to implement a modest fee to cover the additional costs.