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BlockFi, a Cryptocurrency Lending Firm With Credit Card Plans, Receives Funding From Fidelity and Mike Novogratz

Financial services behemoth Fidelity Investments and perennial crypto booster Mike Novogratz have provided funding for BlockFi, a cryptocurrency lending startup.

Specifically, BlockFi’s latest funding came in part from Devonshire Investors, a private investment company owned by Fidelity. It marks another significant move into crypto from Fidelity, following its recent launch of a crypto investment firm of its own last month.

On balance, though, Fidelity is only one of several companies associated with the latest round of investment in BlockFi, which totaled $4 million. (It’s unclear how much of that total amount was contributed by Fidelity’s investment arm.) This represents only a tiny portion of BlockFi’s total funding to date; in July 2018, the company completed a funding round of $52.5 million.

That round was led by Galaxy Digital, a crypto investment firm led by former Goldman Sachs executive Michael Novogratz. Galaxy Digital participated in BlockFi’s latest funding round as well.

What Does BlockFi Do?

BlockFi offers traditional loans that are secured by bitcoin, ether or litecoin. In other words, if you own one of these cryptocurrencies, you can use them to take out a loan for a fixed amount of money in fiat currency.

What’s more, BlockFi also announced on Wednesday that it plans to expand its services to include crypto savings accounts and crypto-backed credit cards. The company is thus extending its operations to crypto-based personal banking, rather far from Fidelity’s traditional areas of focus.

Optimism in Crypto Winter

Fidelity’s investment arm, along with several crypto-focused investment firms, chose to back BlockFi with fiat currency even as the crypto market remains in free fall. The move seems to be a clear indication that mainstream financial services companies like Fidelity remain optimistic about crypto’s future despite the current drop in cryptocurrency prices, layoffs at major crypto companies (including at ConsenSys, which participated in a previous BlockFi funding round) and general gloom-and-doom within the mainstream financial markets about crypto’s future.

It’s one thing for a crypto stalwart like Novogratz to continue betting on crypto in the face of strong headwinds; it’s another for Fidelity, whose public image is hardly tied up in crypto, to keep the faith by pouring more cash into companies like BlockFi.

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