Crypto lending platform BlockFi is cutting interest rates on a number of crypto asset deposits, just about three months after the company lowered rates in March.
BlockFi says its decision was made based on the changing market dynamics and borrowing demand from institutional investors.
But unlike the last time, other leading top crypto lending desks such as Genesis and Canada-based Ledn are not following BlockFi’s lead move, at least for bitcoin deposits. Some of the executives at the firms are seeing increased borrowing demand compared with the previous quarter, so they need to attract the deposits to lend them out.
BlockFi announced June 25 the lower interest rates on deposits of crypto including bitcoin, ether, chainlink, litecoin and a few others will go into effect July 1. The annual percentage yield (APY) for bitcoin deposits larger than 20 BTC, for example, will go down to 0.25% from 0.5%.
BlockFi, in the announcement, said the decision was made due to “shifting market conditions.”
“Rates on cryptocurrencies held in BIA (BlockFi Interest Account) are primarily driven by demand by institutional investors for borrowing these assets,” Rishi Ramchandani, director of business development at BlockFi in Asia, told CoinDesk in an email response. “When institutional investors demand changes, that affects the rates we can offer our BIA clients.”
Ramchandani said borrowing demand from BlockFi’s clients “continues to be stronger than ever,” but that the tenure of the loans “has gone down” along with the rates.