BlockFi Co-Founder on future of crypto: ‘Growth in this sector will continue to go up’

BlockFi Co-Founder Flori Marquez joins Yahoo Finance Live to discuss the future of cryptocurrency.

Video Transcript

ZACK GUZMAN: Welcome back to Yahoo Finance Live. In this week's Crypto Corner, it's hard to overlook the extreme enthusiasm right now in the crypto space, given what we just got in terms of revenue growth from Coinbase with that nearly nine-fold increase year over year for Q1 pointing to the adoption cycle we're in here in this boom. And not just Bitcoin, but increasingly, assets beyond it in the crypto space.

But that's just Coinbase. So what about the market writ large? For more on that, I want to bring on the co-founder of another crypto platform here. It's also backed by Coinbase, I should point out. BlockFi's co-founder Flori Marquez joins us right now. Flori, good to have you back on. I mean, we've talked about BlockFi before kind of in the way that, you know, crypto is not just a way for people to be speculative about investments now, but on your platform, can actually earn yield, more of kind of a true fintech platform. Talk to me about where you think we are in this adoption cycle, given we just heard from Jamie Dimon earlier today talking about the threats that fintech might represent against traditional banking.

FLORI MARQUEZ: Yeah, great to see you again. Zack. It's nice to be on here. And there's so much news around crypto. To start it off-- exactly what you said-- the Coinbase news coming out, showing incredible revenue numbers. And I think we've seen those tailwinds help Bitcoin and other players as well. At BlockFi, we also had incredible growth year over year. We had 18x revenue growth from this time last year, something I'm very proud of.

And one of the things that Akiko asked about earlier is, what is the sustainability of the growth? And how do we think about where we are in the life cycle? And I truly believe that we're just at the beginning. I think that growth in the sector will continue to go up as companies like Coinbase and BlockFi continue to launch products that make it easier for people to convert into crypto for the first time.

So Bitcoin and other assets are an incredible thing to have in your portfolio. I think it's an amazing asset class because it's the ultimate hedge. It's both a tech stock and a hedge against inflation. You talked about it earlier as being a gateway drug into other asset classes. And I think that we're just at the beginning. I think about every single client out there that doesn't currently have crypto in their portfolio and how can companies like Coinbase and BlockFi get those users into the space.

ZACK GUZMAN: Yeah, and you guys have been adding newer tools, reasons for people to sign up. The latest one we talked about last time was your crypto credit card, Bitcoin Rewards Card. But every time we talk about spending, it's always interesting because no one ever really wants to spend here, right? You're holding onto these things. We're talking about Bitcoin as maybe a storage case. But maybe some of those other projects are. Talk to me about maybe the sign-ups you've seen off those, the demand there, and how people are looking at these projects differently.

FLORI MARQUEZ: Yeah, so I 100% agree with you. No one wants to spend their Bitcoin because in general, clients believe that it's going to gain in value over time, right? So we're not looking to spend it. People are looking to be net buyers of those investments. Recently, in the last week, we saw our clients actually be net buyers of alternative asset classes as well. So Ethereum and Link are also winners here in terms of the tailwinds for the entire space. And what we're looking to do is build products that allow people to make it easier to get into crypto.

So you mentioned the credit card. As of right now, we have close to 250,000 people signed up on the waitlist for the credit card. And it's not even live yet. So there's a big demand for these types of products that allow you to earn crypto as a reward, instead of airline miles. On the retail side of the platform, we were aiming to get to 500,000 clients by the end of the year. And we're at over 300,000 clients today. So we're just blwowing past all of our targets.

And I think it's a result of all of these tailwinds, right? You're seeing people talk about crypto in the news. I think the asset class is becoming more digestible. And I think to loop it back to Jamie Dimon, if we think about what he was saying in 2017, he said he didn't like the idea of Bitcoin and thought that people would get hurt by investing in it.

And when we cut to today, he's-- JP Morgan is talking about how Bitcoin is here to stay as an alternative currency. And most recently, in his letter this morning, he mentioned that fintech and big tech are here to stay as well. So BlockFi's right at the center of fintech and crypto. And it makes me very excited for the next few years and what we'll be able to build.

AKIKO FUJITA: Yeah, Flori, he did say that fintech is here to stay, but he also called for more regulation to level the playing field. I wonder what you think that regulation is likely to look like. If we're talking about digital currency specifically, how big of a risk is that to a company like BlockFi?

FLORI MARQUEZ: Well, one of the things that we've invested in for a very long time is being a compliance and risk management first platform. So one of our first hires when we raised capital was a chief compliance officer. So I'm actually very excited for regulators to become more focused on the space because I think that BlockFi is very well-positioned to partner with regulators and really help them understand where is this space going, how should they think about these assets. And I think it'll be a net benefit for consumers because it'll help us understand how to protect the retail consumer in a better way and in the long-term, just help the development of the crypto space overall.

ZACK GUZMAN: Yeah, Flori, last time you came on, I had to make the disclosure that I had used the platform, that I had told my dad about these things. He was very interested in the yield here. He's now on the platform. When we talk about other things, though, to present the DeFi argument here-- because this is kind of where it started, right? People onramp with Coinbase or they onramp with a BlockFi for the yield.

But now with DeFi and decentralized kind of exchanges coming out, too, I wonder how the regulatory aspect maybe ties into that because it does seem like if regulators are already having a hard enough time with kind of the these exchanges here and trying to figure out what they want to do with regulation, it would seem much harder with decentralized ones to really rein those in once they're up. And they are up now. So how do you look at that as maybe an even bigger threat out there, as those projects start to take off?

FLORI MARQUEZ: I really believe in the walk, crawl, run approach. So one of the things that we believe at BlockFi is to really keep our business model as close to how traditional fintechs have built the company. So, at BlockFi, we actively made the decision to be VC-funded, instead of copying this DeFi model that exists. And I think when you think about regulators or new investors moving into the space, they're going to have to start with the thing that they know the best, right? So, the business models that are most similar to what they've regulated in the past.

And I think that's where BlockFi comes into play, right? We build products like the US dollar loan product that's regulated in the same way that any US dollar loan is and really helping regulators understand the parallels between what we're trying to build and how that can apply to new regulation for crypto companies. I do think DeFi poses more of a challenge. And so I think they're going to start with the business models that are simpler to understand like ours, and then move on to more complex issues.