BlockFi: The Crypto Bank
The up and coming platform, BlockFi, is a quickly growing startup that deals exclusively with cryptocurrencies and aims to reach heights like that of current banking companies but in the realm of crypto specifically. The platform allows for asset deposit and withdrawal, credit cards, holdings with interest, and works both on the individual level and on the institutional level. The major thing that sets BlockFi apart from traditional financial companies is, you guessed it, their use of crypto rather than real money. In a world of digital currency, the company is pushing the boundaries of traditional banking and finance ideas. Since only 2017, BlockFi has gained over 450,000 retail clients, over 10 billion in assets, and over 800 employees.
Despite its fast growth, the company is under much scrutiny as they are a major area of regulatory action in 5 states as they insist that they are violating securities laws. Regulators on both the state and federal level as well as members of Congress find their growth unnerving as the technology of the crypto world becomes more and more difficult to keep up with. The unpredictable nature of digital currency leaves many current institutions of financial services at risk of being left far behind and ultimately diminishing their value in the market.
Many Federal Reserve officials have worked to catch up to this race with cryptocurrency and its rapid changes, showcasing just how frightening this takeover can be for the entirety of the financial industry. Digital currency is still a very new and emerging avenue that no one can know for sure its future as there have been both amazing innovations and turbulent flaws in the industry.
It’s been reported that services such as BlockFi are especially vulnerable to hackers and fraudulent activity. Cryptocurrency is much more unpredictable also in that it is not regulated by the traditional Federal Deposit Insurance Corporation but rather it is an individual undertaking that acts like a regular bank but deals exclusively with the unstable age of cryptocurrency.
Furthermore, it’s even true that BlockFi, like Kraken, is one of the more tame crypto-banking platforms. There are many firms within decentralized finance such as DeFi that utilize artificial intelligence entirely to conduct transactions. DeFi, on the other hand, is questionable in its legality. Furthermore, as Coinbase CEO Brian Armstrong points out, it is quite suspicious that DeFi denies allowing customers to earn interest on their holdings.
As the Federal Reserve’s “crypto sprint” is in effect, regulation is a hot topic that seems to keep everyone on edge. The world of cryptocurrencies is indeed still uncharted territory, and the introduction of such firms that work essentially as regular banks instigates questions regarding its security and its future.
