US cryptocurrency lending startup BlockFi has raised $18.3 million USD in a funding round led by Valar Ventures, the company announced on Tuesday.
BlockFi is the first company of its kind to receive institutional funding for crypto-based loans in US dollars, in the form of a $50 million lending facility from Galaxy Digital. The new capital will reportedly be used to expand the array of products on BlockFi’s existing platform that includes interest-earning accounts for Bitcoin (BTC) and crypto-backed USD loans. BlockFi also plans on using the investment to double its number of employees to 60 this year. Earlier this year, BlockFi announced it had over $53 million in customer crypto assets under management.
Valar, which was founded by PayPal co-founder Peter Thiel, makes its first venture into crypto investment with this Series A funding round, which also saw participation from numerous other crypto-focused investors such as Winklevoss Capital and Galaxy Digital. Valar is one of three venture funds co-founded by Mr. Thiel, who has previously invested in prominent Fintech companies like Transferwise and N26.
“What’s very interesting about BlockFi is how they are bringing traditional financial services to this world,” said Andrew McCormack, Valar’s co-founder. “As the cryptocurrency markets evolve, you will start to see more and more companies that provide a lot of block-and-tackling that traditional bank or other market makers have provided in the fiat world for centuries.”
In March, BlockFi unveiled a savings account that promises as much as 6.2% in annual returns and has since gathered about $250 million in assets. The two-year-old company also offers crypto-backed loans, allowing clients to deposit a minimum of $20,000 in digital currency in exchange for fiat loans.
BlockFi has come under some controversy in recent months, mostly due to the advertised interest rate on its deposit accounts. The company claims to offer 6.2% annual interest on deposits; however, due to the product’s terms of service, the company can modify this at its discretion.
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