ZAC PRINCE: That was my lightbulb moment for wanting to start BlockFi.
Just like every other asset class in the world needs debt and credit solutions for investors,
I felt that the cryptocurrency asset class was going to need that.
Before we officially partnered up, I had the idea for BlockFi that came from personal investing
that I was doing in the cryptocurrency market.
I started investing in Bitcoin in 2014 and Ethereum in 2016.
At the end of 2016, early 2017, I was feeling really proud of myself because the prices
started going up.
I was applying for a loan with a bank to buy an investment property, and I put Bitcoin
and Ethereum on the financial statement that I submitted to the bank and not only did the
bank come back and say, well, these assets we don't think are worth anything.
They put me through extra compliance checks and almost accused me of being involved in
some illicit activity of some kind even though I had a good job and [?] income and all that
stuff.
That was my lightbulb moment for wanting to start BlockFi.
Just like every other asset class in the world needs debt and credit solutions for investors,
I felt that the cryptocurrency asset class was going to need that.
I told you, Flori, about this idea in the early fall of 2017.
FLORI MARQUEZ: I think it's crazy to think that that's just a little over three years
ago, because today, we have 340 employees and close to 3 billion in assets under management.
It's insane to think that it's just been three years.
But at the time, I was working at an online lender that made loans to small businesses
and that company was getting acquired by Goldman Sachs.
The day before we sat down to talk about BlockFi, I had actually gotten the offer from Goldman
and I was pretty sure it was going to go there.
When I woke up that morning, I did have-- I stopped for a second.
I don't know if I ever told you this.
I was like, should I really go meet with Zach and talk about this crypto idea?
ZAC PRINCE: Talking about Bitcoin?
FLORI MARQUEZ: Yeah, exactly.
I have to go all the way downtown.
I was like, yeah, screw it, let's go sit down.
You started to tell me about how we could bridge the worlds of traditional finance and
crypto.
I was really intrigued by the idea of being able to bring what we both knew, which was
our expertise and knowledge of traditional financial systems, and to build it in a space
where I don't think there were many people like you and I that were building financial
products for blockchain systems.
I think we saw back then that if we did this right, we could one day bring financial services
for one price to clients anywhere in the world and that's close to where we're at today.
One thing that I love about crypto, and that we've done really well, is to use the fact
that for the first time in history, we can onboard a client anywhere in the world without
having to use a partner bank, and they have access to stablecoins, which I know you've
always been excited about since the beginning and you've been calling the fact that this
really what changes the game for citizens in other countries.
ZAC PRINCE: One of the things that attracted me to the space originally was this idea that
you can move value and money around in the crypto ecosystem, same way you move information
around on the internet and that's incredibly powerful.
Bitcoin has achieved this store of value component really well in emerging and developing markets
where their currencies are more inflationary than the US dollar is currently, and stablecoins
enable the distribution of dollars at a global scale, which simply hasn't been possible before.
If you're just an average person, oftentimes, your access to that market is restricted or
limited and oftentimes, that meant the best solution was to get your hands on $100 bill
however you could and shove it under your mattress.
What stablecoins enable is for folks to digitally access dollars and then be able to do things
with them, whether that's payments or earning interest or buying other goods and services
on the internet, without the same restrictions that used to exist.
Stablecoins and companies like BlockFi are creating accessibility that simply wasn't
possible using the traditional system, and that's really powerful.
FLORI MARQUEZ: I think it's crazy that without really actively marketing in any other country,
over 30% of our clients are non-US, and I think that speaks to the need for financial
services.
ZAC PRINCE: The first product that we launched was our loan products which enables someone
to borrow dollars secured by the value of their cryptocurrency portfolio.
I knew that there was a lot of demand for this because I was someone who wanted it.
One of the tools that is very frequently leveraged by wealth management firms and investment
advisors in traditional markets for their clients is to facilitate the use of borrowing
against an asset rather than selling it to optimize your tax position.
Also, especially, which is true for a lot of folks that are investing in Bitcoin, if
you believe that the price of the asset is going to be even higher in the future, you're
still bullish on it, why would you want to sell?
You'd rather never sell.
I think there's a lot of life scenarios, your husband found out how much your Bitcoins worth
and he says he wants to buy a new truck and you're really smart.
You know that you shouldn't sell your Bitcoin right now because there's all this great stuff
happening, the price is going to be higher in the future.
What if you've got a loan secured by the value of your Bitcoin to purchase that truck for
your husband, who's very fortunate to be married to you because you bought Bitcoin?
This loan product is something that we felt was going to bring investing in cryptocurrency
closer to being on par with investing in traditional assets, whether that's stocks, or bonds, or
real estate.
FLORI MARQUEZ: I was thinking back on the two things from the loan product that led
us into the interest account.
For the first time in history, we were able to bridge crypto assets for traditional institutional
investors.
So, we were the first company to set up a special purpose vehicle to finance the loans,
and we started to make these assets appetizing for traditional investors who maybe were having
a hard time understanding how to get involved with the space.
Then the second reason why we launched the interest account was because clients started
paying off their loans and just leaving their crypto with us.
I don't know if you remember that.
We needed to return the assets back to them, but clients started to
ask us to basically help them figure out what to do with their crypto when they weren't
using it.
That's how we put together the fact that one, people need a solution for how to put their
assets to work when they're not actively trading it and they don't want to store it in cold
storage or other solutions.
The second was we had this opportunity to start investing in the relationships that
we'd built on the institutional side to be able to generate a yield on these assets,
and potentially flow it back to clients.
Back in the beginning of 2019, not many companies are doing that.
ZAC PRINCE: Everybody is familiar with earning interest, everybody's familiar with compound
interest, everyone's familiar with the concept of putting your assets to work for you, and
we really made that possible with Bitcoin and other cryptocurrencies with the launch
of our interest account.
FLORI MARQUEZ: Then the last product that we launched trading came about, well, one,
because it's a wonderful product and we should give people access to trade in and out of
different cryptocurrencies, but also because we were listening to our clients, and we started
to pay attention to withdrawals and deposits in and out, and in from the platform, and
we realized that really, the only reason why people were leaving BlockFi was because they
were trading.
Exactly.
That one was straightforward, and also follows the story of us building the hardest product
first.
I think the biggest difference was how we chose to start the company and building something
that is compliance first.
ZAC PRINCE: We're the only company that offers an interest rate on cryptocurrencies to retail
individuals that is domiciled and regulated in the US and has the backing of institutional
investors with no ICO funding, no token that you have to use on our platform that we're
selling to you, that offers you better interest rates.
We're the only company that has the caliber of team that we have to do the thing that's
probably most important.
The biggest concern for anyone that's thinking about getting a yield on their cryptocurrency
which is manage the risk.
There's really no other platform that has the trustworthiness that BlockFi has and the
track record that BlockFi has and the team that BlockFi has, of professionals who have
done this before in traditional finance or FinTech that are dedicated to building it
in this new cryptocurrency world.
Three of our retail products are already live, the interest account, the loans product, and
our trading product.
Early next year, we're launching our fourth retail facing product which is the Bitcoin
Rewards Credit Card.
The way this card is going to work is you'll spin cash, pay it off in dollars, just like
you do with a normal credit card, except instead of earning airline miles for regular cashback,
the rewards currency is Bitcoin.
You get $250 in Bitcoin just for signing up for the card and spending your first $3,000
on it, and you earn 1.5% Bitcoin cashback on every transaction that you make with the
card.
We have some incredible partners for this product, it's a Visa card, Evolve Bank is
the bank who's partnering with us to bring this to market.
FLORI MARQUEZ: The idea that we're not asking you to give up your cash or your savings to
buy Bitcoin, we're asking you to give up your airline miles, which you're probably not using
anyway.
There aren't any credit cards that exist today that give you the ability to own an asset
that can gain value over time.
ZAC PRINCE: The Bitcoin Rewards Credit Card launches in early 2021.
FLORI MARQUEZ: In terms of where we go next in the short term, we're really thinking about
people in other countries, and how can we make access to payment rails even simpler.
A big question for clients is how do I allocate my assets?
How much crypto should I own?
And thinking about how we can make those answers simpler for them.
ZAC PRINCE: The first thing that I think when I think about what's going to happen in the
future is that the Bitcoin price is going to be a lot higher than it is today.
I'm still very bullish on this asset class.
And I think that other assets have slightly different use cases than Bitcoin, but they're
on a similarly positive trajectory.
The one besides Bitcoin that I'm most excited about is Ethereum.
It powers not only stablecoins, which in and of themselves are going to be massive, but
also, every other kind of major crypto application access to this asset class, whether you're
an institution or a retail investor, it's going to get much easier, it's going to get
much more robust, and it's going to look and feel like traditional assets way more than
it does today.
In terms of BlockFi, what's happening with us in 2021 and 2022 revolves around a few
themes.
Number one, we're going to continue to diversify our set of products so that we can try and
add more value for our clients.
We already touched on the credit card, we plan on launching additional payment products,
including a debit card which will be available in more markets and just the US, including
peer to peer payments.
FLORI MARQUEZ: I'd love for us to be the Venmo for crypto, where it makes it easy for me
to say oh, hey, we went out to dinner, let's split it.
Do you want me to pay you in US dollars or in Bitcoin?
What works better for you?
ZAC PRINCE: We think in addition to all the other great work that's happening in the industry,
it's going to help to create more adoption and ultimately, it's part of what makes us
bullish on these assets for next year and beyond.
FLORI MARQUEZ: We have a culture of hard work, teamwork, no job being too small, and we have
four key values.
The first is pragmatic pioneering, we love an alliteration.
That's really about we are innovating in a new space, but we don't have to reinvent the
wheel.
We need to think about what are the things that exist for a reason, what are the things
that should stay the way they are, and let's only innovate when there's a client friction
or something that we could do better for our consumers.
The second one is transparency builds trust.
That's really about both internally and externally.
Always communicating clearly, making sure that everybody knows what we're working towards,
and really being honest, and that's where doing the right thing when nobody's watching
comes in.
The third one which I think is one of your favorites is clients, not customers.
That one is about really creating world class clients service and treating the people that
interact with BlockFi with a level of excellence that they deserve, regardless of their account
size, and really believing that every single client that interacts with us deserves world
class support.
The fourth value is individual effort, collective success.
That really goes back to what I was saying in the beginning.
At BlockFi, we always put the team success above our own.
We also believe that there's no limits to growth, and we always tell everyone on our
team that we're always students and sometimes teachers, we can always do better.
We can always challenge ourselves to continue growing.
It's up to us to really put our best effort in, knowing that we can have an impact on
not only the future of our company, but the future of financial products and how people
interact with them.