Crypto lender BlockFi highlighted the total amount of loans and net risk exposure it carried at the end of Q2 2022 and shared how it is managing liquidity and credit risk.
Centralized crypto lender BlockFi announced that as of the end of Q2, it had $1.8 billion in outstanding loans from retail and institutional investors and $600 million in ‘net exposure.’
The disclosure came from its Thursday “Q2 2022 Transparency Report,” where the company outlined its risks related to liquidity and credit and shared details on its institutional and retail loan portfolios. Among the outstanding loans to borrowers, valued at around $1.8 billion, the company reported that $600 million are uncollateralized loans.
Institutional loans accounted for $1.5 billion of the total outstanding loans, while retail loans made up the remaining $300 million. The company based its holdings and outstanding loan amounts on a Bitcoin price of $19,986 as a reference point.
We've just published our Q2 Transparency Report with a breakdown of our total AUM, retail and institutional loans, and how we manage related liquidity and credit risk.
https://t.co/qcdRDcYmNQ— BlockFi (@BlockFi) July 21, 2022
BlockFi stated that it has established extensive guidelines to enable it:
“Maintain the liquidity necessary to meet all our obligations under our core business activities, which include institutional and retail borrowing and trading activities.”
These guidelines stipulate that it will hold nearly 10% of the total amount due to clients upon demand in inventory, which will be ready to be returned to clients.
Notably, it will also hold at least 50% of the owed funds in places that can be retrieved and returned to clients within seven days and will hold nearly 90% of the total amounts owed to the clients upon demand, either in inventory or in loans that can be called back within 12 months.
The new liquidity guidelines come several weeks after BlockFi and crypto exchange FTX.US signed an agreement to send $400 million to BlockFi as a “credit facility” with the option to purchase the company for up to $240 million based on performance triggers.
Buy Bitcoin NowThis deal came together after major crypto investment enterprise Three Arrows Capital (3AC) reportedly defaulted on its loan from BlockFi.
In a July 20 post outlining its risk management, BlockFi explained that it only offers uncollateralized loans to borrowers it considers “Tier 1” clients. Tier 1 clients are institutions that have:
“A significant capital base, financial statements audited by reputable third parties, and a willingness to be transparent and engaged with BlockFi.”
All those clients that it considers to be “Tier 2 and Tier 3” are not allowed to make any uncollateralized loans.
