BlockFi co-founder on crypto in 2022: More users are coming and ‘huge driver is going to

Flori Marquez, BlockFi Co-Founder and SVP of Operations, joins Yahoo Finance Live to discuss the fintech company’s cryptocurrency credit card, the rising appeal of its rewards program, and the outlook of crypto in 2022 as more people are beginning to invest and trade in digital assets.

Video Transcript

ZACK GUZMAN: But first, I want to spotlight those moves in crypto. As we’ve been talking about, 2021 has been a banner year for adoption due, in some part, by companies playing their part to help ramp customers out there interested in that. And BlockFi is certainly one of them with their crypto rewards credit card taking off in the year after it launched this summer.

And for more on that, I want to bring on the co-founder of BlockFi and senior vice president of operations, Flori Marquez joining us once again. And Flori, good to be chatting with you here today. I mean, we’ve talked so much about the enthusiasm here. Obviously, Bitcoin’s price has come down a bit. But talk to me about what you’re seeing when it comes to customers signing up for things like the rewards card you offer and what you’ve seen in terms of adoption there.

FLORI MARQUEZ: Yeah, it’s been a huge year for crypto. And it’s great to be here again and talk to you about it. And first, I like to start off with high level numbers. So if you look at year over year returns for Bitcoin, Bitcoin has returned, as of today, 112%. And when you compare that to gold and S&P respectively, that’s a negative 4% and 24%. So, year over year, it has been volatile in the last 30 days. But it’s still a great investment for people who were participating a year ago.

And I can say that this year has been a huge year for mainstream consumer demand into crypto. So we’ve done a little bit of research, looking into the data and trying to understand how are consumers feeling about Bitcoin going into the holiday season. And we’ve seen that 1 in 10 people plan to gift crypto this year. And also, about 2/3 of Americans prefer to talk about crypto versus if you think about five years ago, only 1% of people had ever traded crypto, and 50% of Americans had never heard of crypto five years ago.

So we’ve seen huge moves in terms of American consumers being interested in this type of asset class. And for BlockFi, we are very excited to see that we’ve hit 75,000 people using the Bitcoin rewards credit card. And that’s absolutely huge because most fintech companies look to see about 10,000 credit cards in their first year. So the fact that we’re at 75K just really shows that Americans are banging down the door to earn different types of awards.

And they’re not as interested in earning cash back, for example. So we also surveyed our users on the types of rewards that they like to get. And so far, 2/3 of our clients actually spend less with cash back since getting our card. So people are into crypto.

ZACK GUZMAN: Yeah, I was interested because I was looking at it. And obviously, you added the ability to flex into different cryptos, so not just Bitcoin rewards, but if you want to choose something else like Ether, which has outperformed Bitcoin this year, maybe your rewards would be even higher. But it is capped, right? I mean, I was looking at it. You paid 235 Bitcoin out to the 70– roughly 70,000 members.

So I mean, that’s about, what, when you convert, 137 bucks per member or so. And the rate obviously drops after a certain amount of Bitcoin. So what’s the upside there afterwards? I mean, how does it look after I spend a certain amount of money, am I still earning? And I guess, what have you seen in terms of demand and people wanting to flex into some of these other cryptos beyond Bitcoin?

FLORI MARQUEZ: So Bitcoin definitely is the primary asset in which people like to receive their rewards. But they can also receive it in ETH and other assets that are available in the BlockFi platform. What I think is really interesting, especially when you talk about upside, is that the majority of our clients, when they receive a Bitcoin reward, they’re not selling that for cash. So the upside isn’t necessarily the $140 that you’re receiving in Bitcoin today. The upside is what could that Bitcoin be worth a year from now.

And if we look at that 112% return that I cited year over year today, that actually can give you a pretty good return when you compare it to just earning regular cash. And so the upside is definitely not just the Bitcoin you’re earning today, but that price upside that you can get over the next year. And we can see that our consumers truly believe in not only getting the Bitcoin, but holding it in the long-term.

AKIKO FUJITA: And Flori, you just pointed to the number of people who own crypto. I mean, that suggests to me that you’re just really at the tip here. There’s still a significant market here to capture. I wonder what your outlook is going into next year. Looking at the incredible strides we’ve seen this year, can we see this space continue to grow at that clip?

FLORI MARQUEZ: Absolutely. So if we look at BlockFi numbers alone, over the last three years, we had 10K clients at the end of the year, 100,000 clients at the end of the year, and this year, we’re going to have over 500,000 clients by the end of this year. And so looking into 2022, I really think that we’re going to see three things.

The first is we’re going to see more consumers across the US enter the space for the first time. And I think a huge driver is going to be FOMO. So we’re going into the holiday season. People are going to be talking about the new things that they’ve been investing in this year. And I do think that crypto has become a bit more digestible for the average consumer than it was five years ago.

The second theme that I truly think we’re going to see is recycling of talent. So this past year, largely as a result of the pandemic, many companies have seen what they’re calling the Great Resignation. And you’re seeing a lot of people really switching up jobs and thinking about, what do I want to do in the long-term, and is this the right fit?

And honestly, crypto and fintech has been a huge attractor to people that are looking to learn something new and expand their careers. So I do think that we’re going to see more talent shifting from other more traditional industries into crypto and the fintech sector. And this is super exciting to me because I think it’s a huge opportunity to include demographics that have historically been excluded from financial services.

And the last thing that I think we’ll see in 2022 is some regulatory clarity. There’s been a lot of work being done in terms of working with regulators to understand what needs to happen to allow this sector to continue to grow. And I’m hopeful that we’ll see that next year.

ZACK GUZMAN: Yeah, and regulators, I mean, have been increasingly interacting with you guys to figure out what’s going on when it comes to the high yielding accounts. And look, you know, as I disclosed, we talked about this earlier on in the year. You know, I’ve used BlockFi services, and I want to refer my friends to you guys, too. There are questions around, I guess, similar to banks, leverage ratios and everything else going on underneath the hood because it is attractive to earn, what, up to 9% now in stablecoins.

But there are questions around, I guess, how the company lends and whether or not these things are safe. So I mean, when you look at that and you have these discussions with regulators, that is, I guess, still one question about BlockFi and the other crypto lending platforms out there is what you look to disclose and, I guess, how safe people’s deposits are. So I mean, when you try and answer that question with regulators, what’s kind of the response there?

FLORI MARQUEZ: So BlockFi is a huge believer in partnership with regulators. And at the core our mission is to bridge the worlds of traditional finance and crypto. And I believe that in order to build that bridge, that needs to be true for…

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