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BlockFi has become one of the most well-known cryptocurrency exchanges and digital wallets in the U.S. The New Jersey company started in 2017 and has grown in popularity, especially because of its product BIA (BlockFi Interest Account). This was essentially a crypto lending program where investors were paid extremely handsome interest rates, some as high as 10 percent.
Unfortunately, in February 2022, BlockFi was hit with a major $100 million fine by the U.S. Securities and Trade Commission (SEC). In a first-of-its-kind settlement, BlockFi was accused of misleading customers about the risks of its BIA and failing to register it as a security.
In addition to these fines, they were also ordered to cease offering their BIA to new customers as well as prevent current customers from investing any more money into their interest accounts. This has many BlockFi customers wondering: Should I be considering other platforms to continue earning interest and trade crypto?
There are many good BlockFi alternatives available for cryptocurrency investors. Whether the goal is to trade digital assets or earn interest on stablecoins, many other exchanges have features that are just as good or even better than BlockFi.
In this post, we'll take a closer look at some of the other platforms that investors may choose to work with. We'll also help you understand the pros and cons of each and how they might help you to be a better crypto investor.
BlockFi Alternatives to Consider
While BlockFi is well-known for being exteremly user-friendly, several other crypto exchanges are gaining attention from investors. Here are six other companies to consider for buying digital assets and potentially continuing to earn passive income on them.
Coinbase is the largest cryptocurrency exchange in the U.S. Although it was started in 2011 by former Airbnb engineer Brian Armstrong, they didn't begin offering Bitcoin until 2012 when a former Goldman Sachs trader Fred Ehrsam joined the company. The company really began to gain notoriety when it went public on April 14, 2021.
As a BlockFi alternative, Coinbase is simple to use and often recommended as the go-to for absolute beginners. They offer the opportunity to trade up to nearly 100 different types of cryptocurrencies. The company is also insured against hackers, a benefit that not every crypto exchange can claim.
One thing that BlockFi customers will notice about Coinbase is that their fee structure does tend to be a little higher. Instead of having a flat fee, Coinbase has several different charges that are often criticized for being complex. However, some of these fees can be reduced if users switch to the more premium platform Coinbase Pro.
Coinbase unfortunately does not offer interest accounts as BlockFi did. In fact, when they were considering creating their own version of a similar product called “Lend”, the SEC warned them that they would be sued. Ultimately, Coinbase canceled the Lend initiative.
Coinbase does offer two other ways for participants to earn crypto. One is through an educational program called Coinbase Earn. This is a learning platform where users can take short classes, watch videos and test their knowledge about crypto. In return, they will be rewarded with small amounts of certain cryptocurrencies.
The second is through crypto staking. Crypto staking is when investors agree to lock their crypto with a network for the purpose of verifying blockchain transaction data. In return, those investors are paid competitive rewards or interest.
Staking can be an easy way to earn money passively on your crypto holdings like Ethereum and Tezos. But it does require locking up your digital assets which can leave you vulnerable to price drops. This should only be considered if you plan to invest for the long term.
Kraken is a crypto exchange based in San Francisco. It was started in 2011 by founder Jesse Powell after visiting Mt. Gox, another cryptocurrency exchange that had experienced a security breach that same year. Today, Kraken is the fourth largest exchange by volume.
Kraken users both novice and experienced claim there's a lot to love about the platform. It supports more than 110 different coins. Plus, it has an easy-to-use interface which makes it simple for beginners to get in on the action.
Kraken's central platform has somewhat higher fees. They generally charge around 1.5% for most cryptocurrencies and 0.9% for stablecoins.
Users who switch to Kraken Pro will have fees starting at 0.26%. The interface can be intimidating to trading newbies. However, it does include more detailed information like active charts and open orders which could be worthwhile to learn.
Kraken does not offer a crypto interest account. However, they do offer staking which they claim can earn up to 23% rewards. Again, understand the risks of staking before engaging in this product.
Gemini is both a cryptocurrency exchange and custodian that's based in New York and is regulated by the New York State Department of Financial Services (NYDFS). The company was started in 2014 by Cameron and Tyler Winklevoss; the same twin brothers who are associated with Mark Zuckerberg and the origin of Facebook.
While many crypto platforms are only allowed in certain states, Gemini is available in all 50 states thanks to their emphasis on compliance with regulators. They also have safety measures and insurance in place in case of hackers.
Gemini's trading fees are on par with the other major crypto exchanges. However, investors should note that they do allow far more free withdrawals than their competitors.
Investors have the opportunity to trade up to 50 different types of cryptocurrencies on Gemini. However, what may be more of a draw is the fact that Gemini does have a crypto interest product called Gemini Earn that is similar to BlockFi and is still accepting new customers.
Gemini Earn allows users to get up to 8.0 percent on their digital assets. Just like BlockFi, the most lucrative of these holdings will be stablecoins – in particular, Gemini's own stablecoin, the “Gemini Dollar” (GUSD).
Binance.US is the American partner of the global company Binance which is currently the world's largest cryptocurrency exchange by trading volume.
Many people confuse the two platforms as being the same, but they aren't. Binance was originally started in 2017 in China by founder Changpeng Zhao. However, after the Chinese government started pushing increased regulation on cryptocurrency, Zhao moved the company's headquarters to the Cayman Islands.
In order to comply with U.S. regulations and licensing, Binance decided to create a separate version of itself for American customers. Hence, Binance.US was started in 2019. However, it should be noted that Binance.US isn’t available in all 50 states (currently excluded in Hawaii, Idaho, Louisiana, New York, Texas, and Vermont).
The main draw to Binance.US is its low fees. Unlike other U.S. platforms, Binance charges a low 0.1% trading fee. They also offer access to nearly 60 cryptocurrencies.
Similar to Coinbase, Binance.US does offer a wide variety of educational resources to their clients. However, unlike Coinbase, there is no reward or earning involved with these materials.
Those looking for a BlockFi alternative with a crypto interest account won’t find it with Binance. They do not offer this product.
However, just like Coinbase, Binance.US does offer staking for users who want to earn money passively. However, it's currently only available on 4 coins that are not very well known.
Binance.US users can also get a 25 percent discount on their fees if they purchase the Binance Coin (BNB) token and use it to make trades.
Celsius (or the Celsius Network as it's officially called) is a crypto platform that started in 2017 and is based in London, England. Celsius is one of the biggest competitors of BlockFi and adversities that investors can earn up to 17 percent APY on stablecoins. However, like BlockFi, they have also recently received a lot of pressure from regulators regarding this product.
In terms of crypto trading, Celsius is heavily regarded as being beginner-friendly. Unlike the other exchanges, they don't require any account minimums and don't charge any hidden fees. This is because Celsius generates the bulk of its profits through its lending activities.
Celsius does give investors the ability to trade popular crypto, but the selection is very limited. Another point to note is that they don’t offer a wallet for holding the crypto secure. So users would need to have a separate wallet service lined up to store their investments.
Nexo was started in 2018 in Zug, Switzerland, and is another popular contender in the crypto interest-earning space. Similar to BlockFi and Celsius, investors can earn Up to 20% APY interest that's compounded daily. The company also claims that all digital assets held on the Nexo platform receive $375M of insurance by industry-renowned custodians in the event of third-party hacks, theft, or loss of private keys.
Investors can use Nexo to buy and sell crypto. However, the company’s main product is lending. Nexo offers users what's called the Instant Crypto Credit Line. This is effectively where users can put their crypto up for collateral and borrow against it similar to how a HELOC (home equity line of credit) works. Interest only accumulates on any amounts that are withdrawn.
Why Use an Alternative to BlockFi?
There are a lot of great qualities to like about BlockFi. But sometimes there may be specific reasons why some users might want to look to other platforms as well. Here are a few of those points to consider.
The Ability to Earn Interest
With the recent penalty from the SEC and the BlockFi Interest Account effectively winding down, this has many investors wondering where they can turn to for earning passive income on their crypto. Thankfully, some platforms like Gemini still seem to be offering interest accounts and maintain that they are compliant with all SEC rules.
BlockFi is a good crypto exchange for beginners who just want to stick with the basics like Bitcoin and Ethereum. However, they only offer a total of 8 different cryptos and 4 stablecoins. Therefore, people who want the opportunity to invest in non-mainstream altcoins will need a crypto exchange with more options available.
It’s worth noting that, unlike a stock exchange where any publicly registered stock can be bought or sold, crypto exchanges are free to pick and choose which coins they want to offer. This has to do with the lack of regulation in the industry. Whereas a registered stock is already vetted before it goes to the market, crypto exchanges have an obligation to their clients to vet the coins they offer, and this is why only a select few become available to trade.
In general, BlockFi charges a one percent spread per trade. While fees vary from platform to platform, some exchanges (such as Binance.US) offer lower rates than this for more active traders. Take this into consideration if you think you might trade often as these fees can quickly erode your earnings.
Better Trading Tools
The BlockFi platform is extremely easy to use which is great for beginners. But for experienced traders and crypto enthusiasts who want more detail (such as candlestick charts), they won’t find it with BlockFi. Instead, they’ll need to look to platforms that cater more to traders and can offer more advanced features.
Helpful Educational Materials
While investors certainly have a variety of resources on the Internet to learn more about cryptocurrency, it's also helpful when the platform itself can also provide some guidance on complex topics. BlockFi has some articles available, however, they’re on niche topics and somewhat sparse.
Meanwhile, some of the other platforms have gone out of their way to offer educational materials. Investors who are both new and experienced in crypto will find resources like Coinbase Earn to be far more helpful when they have questions they need to be answered.
Which BlockFi Alternatives are Right for You?
BlockFi has become one of the most popular cryptocurrency exchanges and digital wallets for U.S. customers. This is most notably due to the generous amounts of interest they were paying to customers for lending their crypto.
However, recent events with the SEC have forced BlockFi to pay heavy fines and stop offering this product to new customers. For that reason, many crypto investors may want to explore other alternatives to BlockFi such as Coinbase, Kraken, Gemini, Celsius, and Nexo.
There can be many strong advantages to using other crypto exchanges. Investors who want the ability to continue earning relatively high rates of interest will have to turn to those platforms that can still offer this service. Additionally, traders who want more coin variety, lower fees, and better research tools will find some of the other crypto platforms more favorable.
All in all, your crypto exchange will be your financial partner. While it's important to have useful features, ultimately also the entity that you'll be relying on to earn and protect your money. Definitely do your research and go with the one you trust the most.