Centralized crypto lender BlockFi has stated that it has a total of $1.8 billion in outstanding loans in the second quarter of 2022. The company also provided details regarding its liquidity management. The company added that it had $800 million in net uncollateralized loans.
According to the report, retail loans accounted for $300 million of the total outstanding loans, while institutional loans accounted for $1.5 billion. The company said its outstanding and holding loan amounts are based on a Bitcoin price of $19,986 as a reference point.
BlockFi Sets Guidelines To Maintain Liquidity
BlockFi added that it has set up guidelines to ensure the liquidity maintenance required to meet all its obligations under its core business activities. These include both retail and institutional trading and borrowing activities.
Your capital is at risk.
According to the guidelines, the company intends to hold 10% of the amount due to clients on inventory demand, which will also be available to return to clients.
BlockFi will also hold 50% of the owed funds, but they will be returned to clients within one week. The new liquidity guideline is coming barely a few weeks after crypto exchange FTX.US and BlockFi entered an agreement to send $400 million to BlockFi, which will serve as a “credit facility”. Based on the agreement, the crypto firm has the option to buy the firm for about $240 million, depending on performance triggers.
The deal became a reality after crypto investment firm Three Arrows defaulted on its loan payment from BlockFi.
BlockFi Only Provides Collateralized Loans To Tier 1 Clients
BlockFi, while explaining its risk management, stated that it provides uncollateralized loans to borrowers it classifies as “Tier 1” clients. These clients are institutional clients with their capital statements audited by well-recognized third parties. The clients should also support their assets with “a significant client base”, with a willingness to be transparent with BlockFi.
The lender also has the Tier 2 and Tier 3 categories of clients, who are not allowed to make uncollateralized loans. BlockFi has also released its transparency report for Q2 2022. The report shows the lender’s financial position, which is reflected in the currency winter in the market.
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