BlockFi has $1.8 billion in outstanding loans, including $600 million unsecured
Liquidity issues in the crypto market have forced some of the biggest companies in the space to issue transparency reports addressing the current crisis. BlockFi, a centralized crypto lender, released its own quarterly transparency report after receiving a much-needed financial injection from FTX.US.
The lender received a $400 million revolving credit facility from the US stock exchange last month, but has yet to draw on it.
In its quarterly report, released on July 22, BlockFi revealed the assets it holds on its platform and how it manages all associated liquidity and credit risk.
According to the report, BlockFi currently has $1.8 billion in loans outstanding to borrowers. Because the platform does not require all of its borrowers to post collateral, approximately $600 million of these loans are currently unsecured.
A total of $1.5 billion in loans was granted to institutions such as hedge funds, market makers, proprietary trading firms, exchanges and miners. As all institutional clients go through a credit due diligence process, BlockFi allows a number of them to access loans without posting collateral.
“Whether we require institutional borrowers to post collateral and, if so, the type and level of collateral we need depends on the borrower’s credit profile and the size and loan portfolio composition,” the company said.
The remaining $300 million in outstanding loans are made up of retail loans, all of which are over-secured. BlockFi said it only allows its retail customers to borrow funds worth up to 50% of their collateral, which is subject to liquidation.
The company announced that it has established a set of guidelines that will enable it to manage liquidity risks and meet its obligations to institutional and retail borrowing customers. Namely, BlockFi will hold at least 10% of the total amounts owed to customers ready to be returned immediately upon demand. At least 50% of amounts due to customers will be held in inventory or loans repayable within seven calendar days. And finally, at least 90% of the total amount due to customers will be held in inventory or loans repayable within one year.
BlockFi currently holds approximately $3.9 billion in various digital assets, including stablecoins. About $2.6 billion of that amount was transferred to the company through various loan agreements, while $1.3 billion consisted of collateral provided by its borrowing customers.
More than a third of the $3.9 billion the company holds is easily accessible and held by third-party custodians and multi-party compute wallets and accounts. However, the company noted that some of these accounts could include assets deployed for hedging activities. About 4% of those assets were deployed “as investments” or “for non-custodial staking,” BlockFi said, but did not provide any further details on where the funds were invested.