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How new investors are getting into crypto and what to expect in 2021: BlockFi founder

Yahoo Finance breaks down BlockFi's crypto savings accounts, its upcoming Visa bitcoin rewards credit card, and the broader crypto market with BlockFi cofounder Flori Marquez.

Video Transcript

- Welcome back to Yahoo Finance Live. Bitcoin has seen a bit of a pullback here relative to those new highs hit on Friday, about a 25% pullback from the lows that we've seen this week. But that's not necessarily outside of the norm for crypto investors. Of course if you're new to it, it might be shocking. But it's not just Bitcoin that more investors are accessing here.

BlockFi, a startup focused on the crypto space, is also allowing investors to tap up to 8%, and perhaps sometimes beyond 8%, on savings accounts using crypto. And for more on that, I want to bring on the co-founder of BlockFi, who joins us now, Flori Marquez, alongside with Yahoo Finance's Dan Roberts here.

And Flori, we can get into those accounts in just a second here. But first, just kind of the optimism or maybe the new excitement in the crypto space, what are you seeing for maybe more people signing up on the platform?

FLORI MARQUEZ: Yeah, so it's great to see you, Zack. And it's definitely a really exciting time for crypto. And as you said, for new investors, the recent volatility may bring a little bit of fear. But what we're seeing on the platform and towards the end of 2020, our retail clients have been steadily accumulating Bitcoin throughout 2020. And in December in particular, we're definitely seeing that byflow.

And two important points to remember, especially if you're a new investor, even if Bitcoin went down to 14k, and it's currently at around 30, that would still represent a 100% year over year growth from this time last year. So that's a phenomenal return.

And also one thing that I'm seeing yesterday, BlockFi clients bought two times more Bitcoin yesterday than in our previous record day for trading, and that's over $100 million in trading volume. So I see volatility as an opportunity to get in if you haven't already. And our clients definitely agree and are net buyers.

ZACK GUZMAN: And Flori, I mean, I've been into the crypto space for a while. Full disclosure, I've used BlockFi's services. But not necessarily just to play at Bitcoin here, the other thing that I wanted to have you on to discuss is the savings account side.

And as we were showing a bit before here, Gemini Dollar, which of course is a crypto, the stablecoin, pegged to the US dollar, backed by the Winklevoss twins here on your platform, that you're offering 8.6% APY, which is as we're showing, far above the 0.07% you'd earn in a national savings account on average according to Bankrate. And it's interesting because, you know, the amount you could make on that, of course, would be taxed.

But if you think about a stablecoin, it would seem to be safer, also I should stress, not FDIC insured. So there are risks associated with this. But when you think about maybe the relative savings rate that people could earn out there, who is putting money to work on these accounts, and what have you seen maybe with the risk profile of your users? Maybe how much money is actually being stored in these noninsured accounts?

FLORI MARQUEZ: Yeah, all great questions. And it's been definitely a disappointing year for my savings account rate. I know that at the beginning of the year, certain places would give you 2%. And I felt like every month, I was getting an updated email from my savings account telling me that it was going all the way down to 0.5%, which is still a really good rate to get on an FDIC insured account.

But at BlockFi, to your point, we offer accounts where you can link up your bank account and send cash directly to BlockFi, which gets converted into stablecoin, which is the same value as a US dollar. And you can start earning 8%, which gets paid out monthly.

And the coolest thing about our products is that you can either get that paid out in USD equivalent, or you can even get your interest paid out in Bitcoin, so you can start earning your interest and gaining passive exposure into a new asset class.

So they're products that I'm really excited to share with consumers. Today we have hundreds of thousands of users on the platform. And the people that use our products span from everyday consumers who are buying Bitcoin to the first time, to even some small corporates.

It's really easy to open a bank account. And you can start with as little as $10. And I think what's interesting about our users is that as opposed to most fintech platforms, our average account size is actually $50,000. So people are depositing, to your point, a meaningful amount of assets, so that you can get the most out of putting your money to work for you.

DAN ROBERTS: Flori, Dan Roberts here. You guys also have a crypto rewards card launching with Visa. And of course, there are a small handful of startups that Visa has sort of approved to do that, Bitcoin rewards credit and debit cards. Can you tell us how that works and how that might also bring in new users to your ecosystem?

FLORI MARQUEZ: Yeah, of course. We're super excited to partner with Visa. And we're actually the first company to offer a crypto rewards credit card. And one of the things that I focus on as a builder is how do I build products to get people into this space? How do I build products to get people to understand Bitcoin and not be afraid to have it in their portfolios?

So our credit card allows you to spend and use the credit card like any other credit card that you have in your wallet. The only difference is that instead of earning credit card miles, which are much harder to use today than they were a year ago, you earn Bitcoin as a reward. And that would go directly into your BlockFi account.

So I think it's an awesome way for people to gain passive exposure into this new asset class, because while it might be difficult for me to convince people to maybe put $100 of their own into buying Bitcoin, it's a bit easier to get me to convince you to give up your miles to earn Bitcoin instead.

DAN ROBERTS: And Flori, while we have you, another big kind of milestone for the space. At some point this year, we are going to get the Coinbase IPO. And Coinbase is actually one of the biggest investors in BlockFi. Talk to us a little bit about what that might mean for the industry. What does it mean for you guys? And might end up being, obviously, a litmus test for other crypto companies eventually to look at listing.

FLORI MARQUEZ: So I think the news is great. And there's been an increased focus, I think, on regulators, in terms of looking at this asset class. And to know that you have a crypto company in front of the SEC having active conversations in terms of thinking, how do we make it easier for US consumers to invest into this asset class, is just huge news for this space as a whole.

So what we've definitely seen as a trend this year, in terms of retail consumers, regulators, institutions moving into the space, is this concerted focus on crypto and the fact that you're getting additional regulation and more regulators involved and giving guidance to how we can make it easier for consumers to access this asset class I think bodes extremely well for the future of development within Bitcoin and I think what companies can do in this space going forward.

ZACK GUZMAN: It's exciting times. And obviously, it's exciting to see some of these innovations. I don't remember ever seeing a rewards card tied to gold, and digital gold apparently able to draw more people in. Dan Roberts, appreciate you coming on here alongside the co-founder of BlockFi, Flori Marquez. Thanks again, be well.