I’ve been a BlockFi user for close to one year now and a lot can be said about the platform, mostly good and but also a little bad. The BlockFi Interest Account offers a tempting 6% APY on your BTC, 5.25% on ETH, and 8.6% on stablecoins, but is it worth the risk?
In this BlockFi review, I’ll try to share the full rundown so you can decide for yourself if storing and lending your crypto with the company makes sense to you or not.
BlockFi review in brief
Headquartered in New York, BlockFi is a regulated crypto lending platform backed by big dogs like Peter Thiel (founder of PayPal), Coinbase, and the Winklevoss twins. With the BlockFi interest account you can earn monthly interest on your crypto assets with close to zero effort involved.
Having spent months testing the best cryptocurrency lending platforms and interest accounts, these are my top takeaways for BlockFi:
- Launched by Zac Prince and Flori Marquez in 2017, BlockFi is a leading cryptocurrency lending and loan platform that has raised over $100m since founding, with backing from financial gladiators like Valar Ventures, Fidelity, SoFi, and Coinbase.
- BlockFi offers investors high yield interest accounts with compounding returns and crypto-to-USD loans to borrowers at attractive rates.
- BlockFi is licensed by 30 top-tier financial authorities in the US and uses NYDFS-regulated Gemini for storing clients assets under strict banking laws, making it a trusted provider for interest-bearing crypto accounts and for borrowing cash or stablecoins without selling your crypto.
- Interest rates and fees at BlockFi are easy to understand and competitive, thanks to its effective yield based on monthly compounding, core number of supported currencies, free monthly withdrawals, and low-end trading fees.
Special offer: Get a crypto bonus of up to $250 in BTC with a deposit of $25. See full terms on BlockFi’s website.
On BlockFi’s secure website
BlockFi main features
|🛍️ Products offered||Crypto interest accounts, crypto loans|
|💰 No. of supported cryptocurrencies||4|
|💰 No. of supported stable coins||4|
|₿ Bitcoin interest rate||6% APY|
|💵 Stablecoin interest rate||8.6% APY|
|💳 Deposit methods||Wallet transfer, bank wire|
|🔒 2-Factor Authentication||Yes|
|🛡️ Insurance||Gemini Custody has $200 Million in cold storage insurance coverage|
|❄️ Storage||Cold storage with Gemini|
BlockFi pros and cons
BlockFi offers a limited selection of products for borrowers and lenders: flexible crypto savings accounts with no minimum lock-up period, crypto loans with no credit checks, and a simple trading feature.
Investors can enjoy around 8.6% annual percentage yield on PAX, USDC, and GUSD, 6% on BTC, 4.5% on ETH, and 5% on LTC. Borrowers, on the other hand, can get an instant USD or stablecoin loan at attractive rates by putting their Bitcoin or Ether up as collateral.
Other advantages include worldwide accessibility, free monthly withdrawals, high trust, and the safety of investing alongside big institutional players. Account opening is also fast and intuitive.
On the negative side, BlockFi has a limited product portfolio, supporting only six currencies, with no extra frills like high-risk staking awards or cashback debit cards. In terms of aesthetics, the web design feels dated, although easy to navigate.
- High interest on deposits
- Flexible savings plan
- Compound interest
- Fully regulated
- Funds stored at Gemini
- Institutional firms as borrowers
- Backed by venture capital firms
- Lower rates than some competitors
- Limited number of coins
- Lack of speculative products may bore risk-prone investors
Despite the growing popularity of the platform, it’s important to remember that cryptocurrencies are not protected by any legal insurance scheme and you may have no recourse if something happens to your funds.
History of BlockFi
BlockFi was founded by Zac Prince who spent several years working in the online peer-to-peer lending industry serving different leadership roles. His journey into the rabbit hole of cryptocurrencies started around 2015 when he bought and sold Bitcoin for the first time. Wanting to combine this personal interest with his professional working experience, he launched BlockFi in 2017 with co-founder Flori Marquez.
The company raised $60m in equity and was the first to receive institutional backing for issuing crypto-backed loans. The flagship product gave crypto-holders the ability to convert their assets into real USD without having to actually giving it up. Shortly after, in 2019, BlockFi released its second core product, the interest-bearing cryptocurrency accounts.
BlockFi grew its revenue over 20x in 2019 and now claims a loan book worth more than $650m, with a 0% loss of funds since inception in 2018. This fact led to a second round of funding that raised $30m from prominent investors such as Valar Ventures and Winklevoss Capital. In Q2 of 2020, BlockFi posted another revenue increase amounting to 100%.
BlockFi crypto interest account
BlockFi’s interest accounts are an alternative type of savings accounts that pay interest on your cryptocurrency deposits. They are accessible worldwide with few geographical restrictions and are free to open for everyone. Interest is paid out once at the beginning of every month and compounds on top of your existing balance.
BlockFi gives you access to 6 interest accounts in total, 3 cryptocurrencies and 3 stablecoins.
By default, interest is paid out in the same currency that you deposited. There are no fixed term lock-up periods for your money, and funds can practically be withdrawn at any time after a short security check.
Unlike overseas competitors such as Celsius Network and Crypto.com, BlockFi does not require you to stake any ICO or native tokens to earn the best interest rates. This is great, as you do not risk losing money by holding a stake that might decrease in value.
Besides the BlockFi interest account, there is a limited product selection focused solely on cryptocurrency lending and borrowing. They also have a very simple exchange function, that allows you to exchange currencies immediately against a spread. There are also plans to release a Bitcoin-cashback Credit Card.
For alternative interest payments, you can select the Flex payment plan and receive interest in a different asset than you deposited. This is optimal if you want to keep your portfolio diversified.
Say for example you want to keep your exposure to BTC at a fixed amount. In this case, you could opt for payments in a dollar-backed currency like PAX and limit your general exposure to crypto-asset volatility without losing the upside potential.
BlockFi supported currencies
Supports currencies currently include Bitcoin, Ethereum, and Litecoin on the crypto side, and USD-backed Paxos Standard, USD Coin, and Gemini USD on the stablecoin side.
Unlike its immediate competitors Crypto.com and Celsius Network, BlockFi does not offer interest accounts on gold-backed tokens like PAXG or XAUT.
BlockFi interest rates
BlockFi has competitive interest rates across the board. Here we compare BlockFi’s rates with competitors Crypto.com, Celsius, and YouHodler for flexible deposits over 12 months. Note that BlockFi, Celsius, and YouHodler calculate interest as APY, while Crypto.com uses simple interest.
BlockFi only offers flexible holding terms which means you can withdraw your money whenever you need to (after a 24-hour security check and hold).
Although interest is only accredited at the beginning of every month, you will still receive a prorated (partial) interest payment based on the number of days your deposit was held in your account.
BlockFi loans are USD or stablecoin loans obtainable by using your crypto assets as collateral. This means you temporarily hand over your crypto to BlockFi and receive USD or stablecoins in return.
BlockFi loans are available worldwide, with a few geographical restrictions, and can usually be received within 2 hours of applying.
Once your loan application is approved, BlockFi will transfer the USD into your bank account, or, alternatively, GUSD or USDC to a personal wallet address of your choice.
- Transparent fee schedule
- No credit checks or income requirement
- Flexible repayments with interest-only repayments
- Possible tax benefits as you are not cashing out
- Origination fee of 2%
- Price volatility may produce margin call if your crypto has a bad day
- Low maximum loan-to-value ratio of 50%
What are BlockFi loans?
BlockFi loans are crypto-backed loans for people with minimum $5,000 worth of Bitcoin, Ether, or Litecoin, who want to access their dollar equivalent without selling the underlying asset.
These loans have a maximum loan-to-value rating of 50% and a minimum of 20%. If the loan-to-value ratio increases to 70% because of market volatility (e.g. Bitcoin drops in price), a market call will occur and you will have to add additional collateral or pay off your loan.
BlockFi loans: Main features
BlockFi accepts 3 cryptocurrencies as collateral for loans, Bitcoin, Ethereum, and Litecoin, and issues loans in either USD, GUSD, or USDC.
|Loan paid out in||GUSD, USD, USDC|
|Accepted collateral||BTC, ETH, LTC|
|APR (varies)||4.5% – 15.25%|
|Loan amount||$5,000 – $1,000,000|
|Collateral LTV||20- 50%|
|Loan duration||12 mo. (extendable)|
|Waiting period||USD: 3 days, USDC/GUSD: instant|
|Bank payout method||Wire (USA), IBAN/SWIFT (EU)|
|Fiat payout fees||Exchange fees may apply|
Why do people use crypto loans?
There are many reasons why people take out a cash for crypto loan rather than selling their assets. These examples are not tax, legal, or investment advice (please consult relevant experts, if necessary), but some documented use cases include:
- Tax optimization: In many countries around the world, local tax authorities don’t consider crypto-to-fiat loans a taxable event. Temporarily converting your assets into a legal tender opens a range of possibilities to cover real world expenses.
- Staying invested: Collateralized lending lets you remain invested in crypto while having fiat liquidity at your disposal and without losing the upside potential of the underlying assets.
- Rate arbitrage (high risk): Investors can capitalize on the interest rate differential between two providers by borrowing an asset at low interest from one platform while lending it for more on another.
- Shorting or longing (high risk): If you anticipated the impact of Covid-19 on the world markets, borrowing fiat for crypto could have helped leveraged your position significantly, allowing you to harvest the difference between the amount you borrowed and the gains you made.
How BlockFi loans work
Applying for a BlockFi loan is relatively straightforward. We found the loan process simple (see the guide below), and our application was approved within 24 hours. For US citizens, BlockFi performs a credit history check. For overseas borrowers, it’s not clear what kind of information is taken into account.
- First, you will have to create an account as an individual or business by providing your name, email address, country, and phone number.
- Once your account is approved, you can apply for a loan by inputting the desired loan amount, the type of crypto you want to put up as collateral, and your desired loan-to-value ratio.
- Your loan application is reviewed within one business day. This involves a KYC/AML process and a review of your credit history from public record checks. However, there are no hard or soft inquiries involved, which means your credit score should remain unaffected. This should also only be relevant if you are applying with a US-registered account.
- You should receive a decision within one business day. If you are satisfied with the terms and accept them, you will be asked to transfer the collateral to a BlockFi wallet held at Gemini. Once received, they will release the payment to your account, via wire for USD or a wallet for stablecoins.
Platforms and tools
BlockFi’s web platform and mobile app are both simple and easy to use even for beginners. On the other hand, they are not customizable and only available in English.
The web platform is extremely user-friendly and very easy to navigate. The main dashboard gives a clear overview of your total balance and shows the latest transactions in your account. Your crypto balances and portfolio distribution are clearly presented. You can also see how much interest you have earned and accrued.
On the negative side, the individual sections for the Interest Account and Loans are very hard to find and hidden behind two small icons.
- User-friendly design
- Two-step verification
- Clear account summary
- Downloadable earnings and tax reports
- No multi-lingual support
- Value only showed in USD
- Some features are hard to find
We liked that BlockFi’s web platform reflects its simple suite of products with no unnecessary bells and whistles. Unfortunately, it is not well optimized for international usage, as it can only translate your account value into USD, with no support for other major world denominations like the EUR, GBP, YEN, or INR. Customer support is also only available in English.
BlockFi has excellent security features in place to protect your account:
- Two-factor authentication: This provides stronger security for your account by requiring a token generated by an authenticator app on your phone.
- Whitelisting: Withdrawals from your account can only be sent to addresses you have added and approved. New addresses are disabled for the first 72 hours.
- Security hold: All withdrawals are subject to a 24-hour security hold and randomized additional identity checks.
You can easily access all the main functions from the top menu: Deposits, withdrawals, the trading feature, and apply for a crypto backed loan.
- Adding funds: Depositing funds to your account only takes one click.
- Earning interest: Interest begins accruing the day after you deposit, and is paid out on a monthly basis. If you deposit in the middle of the month, you will earn around15 days worth of interest.
- Withdrawing funds: It’s straightforward to withdraw real money via bank wire as well as sending digital assets to an external address
- Loan application: Applying for a loan is a simple 3-step procedure and takes almost no time because everything is highly automated
You can exchange cryptocurrencies on the platform itself without having to withdraw to an external exchange and redeposit afterwards. This may help save fees and mitigate risk of moving your assets in and out.
There are no direct fees associated with trading this way. Instead, the platform charges a spread for purchases and sales. This means that the price to buy a currency will always be somewhat higher than the underlying market, while the price to sell will always be somewhat below it.
Calculating your crypto earnings or losses for taxes is one of the more painful parts of trading cryptocurrencies. You should always make sure that the platform you select offers an easy way to download and export your entire trading activity or integrates with a trusted cryptocurrency tax software.
BlockFi has a reporting section that allows you to easily download your monthly account statements. These reports show the amount of crypto you have earned in USD equivalent and your balances for each coin.
- Monthly statements with report
- Yearly tax reports
- Trading activity
Unfortunately, reports are only downloadable in PDF format and not as CSV files.
BlockFi has an app version available on iOS and Android. The mobile version is as simple as the web platform and has a very intuitive layout with simple navigation.
The app shares most of its features and functionalities of the browser-based version, including the ability to make deposits, withdrawals and trade currencies. Moreover, it provides a secure login experience with Face or Touch ID.
- Extremely easy to navigate
- Two-step verification
- Biometric authentication
- Simple in-app trading feature
- No live-chat support
- Some features are difficult to locate
Although the app was only recently released, we didn’t encounter any bugs or errors when we tested it.
To protect your account, the app support two-factor token authentication. Face and Touch ID (recognition) is also supported which is considered a fast and secure way to log in.
The app very easy to move around in as most functions is accessible from the sticky bottom menu. All your essential account information and transaction history is confidently presented on the front page. All in all, it covers what you need to keep an eye on your portfolio on the go without any unnecessary extras.
BlockFi charges no fees for its interest accounts, and offers one free withdrawal per month. This means there are fees for account opening, deposits, maintenance, inactivity, custodial services, or other non-trading activities besides withdrawals.
On the other hand, interest rates and fees for dollar loans are average compared to other providers.
Interest account fees
There are no fees for account maintenance, deposits, or investment services associated with the interest account. The first withdrawal each month is free of charge, while subsequent withdrawals incur a fee depending on the withdrawn currency.
You will not be charged for receiving wire transfers. However, your own bank may charge a fee.
BlockFi crypto and fiat deposits are free of charge. However, fiat deposits are limited to USD and are automatically converted into the Gemini Dollar (GUSD) stablecoin free of charge.
Credit/debit card top-up are not supported.
USD wire transfers are free to receive, but your own bank may charge a handling fee and conversion fee for the transaction.
International transactions in any other currency than USD will be converted into USD by the company’s partner bank at their exchange rate. The partner bank charges also a fee for this service, but the exact amount is not clear.
BlockFi withdrawal fees
Users get one free crypto withdrawal per month, while additional withdrawals carry a fee. This fee is deducted from the transacted amount.
|First monthly withdrawal||Free|
You can also withdraw your digital funds as USD by selling them back to the platform and request a wire transfer of the converted amount. The cost for initiating a wire withdrawal is not indicated on the website, but the cost will depend on their partner bank and your own.
BlockFi loan fees and rates
BlockFi has competitive loan fees for borrowing cash or stablecoins, although not the best available.
BlockFi loans: Interest rates
BlockFi loans start at an 4.5% interest rate and have a 12-month duration. Actual interest rates vary and depend on the loan amount, your credit history, and your location. There is also a loan origination fee of 2% to cover the costs of processing your loan application, which means the total annual cost of the loan start at 6.5%.
When we tested in August 2020 from our European account, rates started at 6.70% (including fees) for taking out a $5000 USD loan with a 20% LTV against BTC.
|Amount in BTC||20% LTV||35% LTV||50% LTV|
BlockFi loans are interest only loans, meaning you are only required to make monthly payments of interest but not repayments on your loan principal. There is no penalty for early repayment, and the remaining interest is forgiven if you choose to do so. If you can’t afford to repay the full principal at the end of the loan term, you have the option to refinance with new loan terms or additional collateral.
Loans can be paid back partially or fully at any time with crypto or USD.
Types of payback
- Partial payback: You can pay back a portion of your loan at any time. This will reduce the amount of interest you pay on a monthly basis.
- Full payback: You can pay off your entire loan balance at any time. For loans with monthly payments, you will only pay the interest accrued through the date you pay off.
BlockFi and its affiliated entities are regulated by multiple financial institutions in the United States and is probably one of the best regulated crypto companies after Coinbase.
- Regulated and licensed by 30 US agencies
- Stores reserves with Gemini, a NYDFS-regulated trust company
- Solid and public management team
- Backed by big institutional investors
- Lends crypto on over-collateralized terms
- Safety of funds ultimately depends on the platform and its partners
- Interest accounts are not covered by FDIC, SIPC, or similar insurance
- Operates on fractional reserves like traditional banks
Ultimately, cryptocurrencies are speculative instruments and involve significant risk of loss. There is no absolute guarantee of investment protection and you should do a complete risk assessment before making any investment decision.
Is BlockFi regulated?
Yes, BlockFi is regulated in 25 US states by 30 financial authorities in total. To be certain, you can verify the licenses listed on their website by searching for them in the database of each regulator. For example:
- California Department of Business Oversight: License number 60DBO 81955
- State of Washington Department of Financial Institutions: License number 550-MT-121212
- Government of the District of Columbia Department of Insurance Securities and Banking: License number MTR1873137
Is BlockFi legitimate?
Based on our research, we believe BlockFi is a legitimate company as it is licensed to operate by 30 US regulators, has 19 venture capital firms backing it, and is transparent and honest about the risks of non-traditional lending. This ensures their business practices are legal and that they handle your money in a compliant manner.
Is BlockFi safe?
When it comes to safety on crypto platforms, we recommend that you ask yourself questions like these:
- How are my digital funds secured?
- Are my deposits insured?
- What are the potential risks?
How your digital funds are secured
Client funds are deposited with the custodian Gemini at a unique wallet address. Gemini is a licensed New York trust company regulated by the New York State Department of Financial Services and operates the New York Banking Law.
This matters because Gemini undergoes regular and strenuous bank exams like traditional finance institutions, must be compliant with cybersecurity regulation, and maintain a certain capital reserve at all times. Funds stored in cold storage with Gemini are secured with a $200m insurance coverage, which one of the largest insurance coverages in the world for a crypto company.
Is BlockFi insured?
Despite adequate measures to protect your assets, your BlockFi crypto interest account is ultimately not covered against losses by any by insurance or investor compensation scheme, such as the FDIC or SIPC.
What are the risks?
While the platform has reported impressive growth figures, healthy transparency, and has institutional backing, using it is not risk-free. Some possible risks may include:
- Bankruptcy risk. The company was founded in 2017 and could still be considered a start-up that depends on venture capital.
- Rehypothecation. The T&C give the company significant freedom over how it uses investors funds: “We will lend, sell, pledge, rehypothecate, assign, invest, use, commingle or otherwise dispose of funds and cryptocurrency assets to counterparties,”
- Regulation. New laws may adversely affect the use and value of digital currencies as a whole.
- Bank run. Uncertainty may cause a large number clients to withdraw from the site at the same time.
You can read more about the risks in this article.
As always, look past the upside potential, analyze the risks carefully, and only commit what you can afford to lose.
Phone and email support are available for clients, but there is no live chat service. We received relevant answers by email within one business day. However, support for international customers is not well optimized, as you can only call within New York business hours.
- Relevant answers
- Fast support within business hours
- Friendly support
- No live chat
- Urgent support missing
- Not available 24 hours a day
Downsides include the lack of live chat and 24/7 availability. Phone support is only available Monday to Friday. We mostly received relevant responses to our technical and legal questions, but sometimes also canned and inadequate answers.
BlockFi’s account opening is easy and available to clients worldwide. Account onboarding is fast and fully digital.
- Available worldwide
- Open to both individuals and businesses
- Fast onboarding
- Automated identity verification
- Not available in all US states or sanctioned countries
Who can open an account?
BlockFi accepts clients from all over the world, with a few exceptions. For example, you can’t open an account if you are located in sanctioned or watch list countries, including Iran, Cuba, North Korea, and Syria. Additionally, the Interest Account is not available in New York, as the company doesn’t hold a New York State BitLicense.
How to open an account
BlockFi’s account opening is fast and nearly fully automated. Online registration and KYC takes less than 5 minutes, but the approval itself may take a few days. If your account is authenticated automatically by their system it is usually approved within one business day. However, some accounts are subject to manual reviews which takes more time.
Opening an account involves 3 steps:
- Online registration with KYC
- Authentication process
- Account funding
To get your account verified, you need to provide an unexpired government-issued photo ID and selfie:
- Proof of identity: Verify that it’s actually you by uploading your driver’s license or an image of your passport.
- Selfie: Match the official photo ID with an image of yourself
Once approved, you need to fund your account via wire or blockchain to start earning interest.
BlockFi is one of the fastest growing crypto lending platforms, regulated by multiple financial authorities and backed by big investors like Fidelity, Coinbase, and Valar Ventures.
On the plus side, BlockFi offers competitive compound interest rates, is available worldwide, stores deposits securely with Gemini Custody, and offer flexible withdrawals.
Special offer: Earn up to 8.6% on your crypto, fully regulated platform, backed by Coinbase
On BlockFi’s secure website
However, some drawbacks include a limit selection of coins and average rates for borrowers.
If you understand the risks involved in lending out your crypto, BlockFi could be a great way to start earning interest on your crypto with little effort.
Founded in 2017 and headquartered in New York City, BlockFi is a leading provider for crypto interest accounts and crypto-backed dollar loans. With Gemini as its custodian and multiple top-tier licenses, investors can enjoy up to 8.6% annually with compound interest, no asset locking, worldwide availability, all in one great package.
Is BlockFi legitimate?
BlockFi is a fully legitimate and regulated company with multiple US state licenses. Further testifying to BlockFi’s legitimacy are its big institutional investors, which include Valar Ventures, Morgan Creek Capital Management, Coinbase Ventures, Galaxy Digital, and Winklevoss Capital.
Is BlockFi safe?
BlockFi is considered safe because it uses Gemini as its primary custodian, is fully regulated, allows 2-factor authentication for securing your account, and provides whitelisting of addresses with a 7-day hold. Moreover, BlockFi has not lost any customer funds. That being said, BlockFi is not a completely risk-free platform.
Is BlockFi legal?
Yes, BlockFi is a completely legal and regulated company.
Where is BlockFi available?
The BlockFi Interest Account is available throughout the world, except in a few sanctioned countries. The BlockFi Interest Account is available in 49 of 50 U.S. states but not in New York.
What is the BlockFi Interest Account?
The BlockFi Interest Account is a cryptocurrency is a savings account for cryptocurrencies that generates interest on your digital assets, between 4% and 10% per year depending on the currency.
Is BlockFi DeFi?
No, BlockFi is not a decentralised finance or DeFi platform. Rather, it is a centralised finance or CeFi provider which requires KYC and custody control of your assets.
What are the interest rates on BlockFi?
Interest rates on BlockFi may vary, however as of writing you can expect to earn 6% on Bitcoin, 5.25% on Ether, 5% on Pax Gold, and 8.6% on stablecoins.
How often does BlockFi pay out interest?
BlockFi pays out interest at the beginning of every month. You can see all your previously monthly interest payments from the dashboard.
Can you earn interest in a different currency?
Instead of in-kind interest, you can choose to earn interest in a different currency than the one you deposited by enabling Flex payments under your profile settings.
Can you trade between currencies on BlockFi?
BlockFi has an in-built trading function where you can trade between different cryptocurrencies. The spread is around 1% and not very competitive, however it saves you the hassle of withdrawing to an exchange.
Can you buy Bitcoin on BlockFi?
You can buy supported cryptocurrencies and stablecoins on the BlockFi platform through the in-built exchange feature.
How much do withdrawals cost?
BlockFi allows one free crypto withdrawal each month and one free stablecoin withdrawal each month. However, your withdrawal is still subject to network and miner fees.
What is crypto lending?
Cryptocurrency lending is a form of peer-to-peer lending that connects borrowers with lenders. It provides borrowers with fiat or stablecoin loans, while offering lenders a chance to grow their digital holdings by lending to individuals and investment firms.
What is the difference between lending and staking?
Lending and staking are two income strategies that are often confused. Lending allows you to earn interest payments by lending out your crypto, while staking involves holding funds to secure the operations of a blockchain network and receive newly minted coins as in return.
Is it safer to earn interest on stablecoins?
Trusted stablecoins like PAX, TUSD, and USDC are pegged to the U.S. dollar and backed by fiat currency held in a bank account with a 1:1 ratio. Since stablecoins keep the same value as their real-world counterpart, they are ideal for risk-averse investors who want to avoid the volatile roller coaster rides of the general crypto market.
What is overcollateralization?
Overcollateralization means to secure a loan with collateral worth more than the loan itself. The ratio between the value of the loan and the value of the collateral is called the loan-to-value ratio (LTV). Overcollateralization reduces risk for the lender and confirms the borrower’s solvency.