As cryptocurrencies boomed in 2017, the need for crypto-focused financial services grew rapidly. One of the areas where interest was high was crypto lending. Crypto lending enabled crypto owners to acquire fiat currency without having to sell their crypto holdings. Moreover, they could earn interest on their crypto. One company that thrived in the nascent industry is BlockFi.
Founded in 2017, BlockFi was one of the pioneers in crypto lending. The company allowed its clients to receive cash advances, with their crypto stashes acting as the collateral. BlockFi launched an interest-yielding deposit account in beta in January. When it finally went live in March, interest from clients was already high and within its first month, it had attracted over $35 million in crypto deposits.
The New York-based company has continued to grow, even during the crypto winter, with its clients seeming unfazed by market movements. As CoinGeek reported, BlockFi obtained a money transmitter license in the state of Washington recently. The license allows the company to offer its services in the state, most notably its interest-yielding account. In doing so, BlockFi became the first company to offer crypto-denominated interest-yielding accounts in the Evergreen state.
BlockFi’s chief compliance officer, David Spack, said the license was crucial as it sought to expand its product offerings in the state. Speaking to CoinGeek, he stated that Washington is one of a few states that require a specific license for any firm that seeks to offer such a product. The other two are New York and Connecticut. The company is working to ensure that it secures all the required licenses “to enable more users more access to all of our products, regardless of their location.”
While BlockFi managed to obtain the license, other crypto firms have found it extremely difficult to do so. Kraken and Shapeshift are some of the prominent players who chose to quit operations in the state, citing the licensing as the major barrier.
Spack admitted that the process isn’t a walk in the park, but believes that it was well worth it. He stated:
“We wouldn’t say it was a struggle, but it’s definitely rigorous, and rightfully so. For this industry to thrive, there needs to be a degree of trust, and trust comes with compliance and adherence to existing regulations, which has always been a priority for us. We also feel that this is something that sets us apart from our competitors, so we don’t see it in a negative light at all.”
The Evergreen state has been receptive to BlockFi’s other products, Spack told CoinGeek. He remarked, “We have seen great success when offering our lending products previously. We have continually received feedback from Washington residents (both our loan customers and prospective customers) that they were interested in having access to the BIA, so there has been quite a bit of demand for our products in the state.”
BlockFi intends on expanding all its services to the other states and has already kickstarted the process of license application in several other states. They include Illinois, Kansas, Alabama, Connecticut, Maryland, Minnesota, Florida and Delaware. The company has also applied for a license from New Jersey, North and South Carolina, Rhode Island and Nebraska.
“In addition to these, we plan to apply in Texas in the near future,” Spack added.
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