Risks of BLOX Earn
BLOX Earn can use your crypto in different ways to generate returns. This may involve lending crypto to carefully selected parties or using it for staking activities. For every option, thorough research is conducted into the parties involved and the associated risks, to ensure your crypto is managed as responsibly as possible.
What is the Earn program?
With an Earn account, you automatically participate in the Earn program to generate returns on your crypto. Under the Earn program, your crypto is lent to BLOX Earn based on a loan agreement. In return for lending your crypto, you receive the displayed return in the BLOX app and on the BLOX website. This is similar to how traditional loans work. However, there is one important difference: you do not receive your returns in euros, but in the same cryptocurrency you lent. For example, if you lend Bitcoin and receive a 1% return, that return is paid out in Bitcoin.
Although the Earn program offers a way to earn returns on your crypto, it involves risks—just like any form of investing. BLOX Earn uses your crypto for different purposes, which may affect the safety of your lent crypto. That’s why it’s important to fully understand the risks before deciding to lend your crypto by choosing an Earn account.
What are the risks of Earn?
It is widely known that earning returns involves risks, and this also applies to lending your crypto. For example, BLOX Earn—the party borrowing your crypto—may no longer be able to repay the loan or the promised returns. BLOX Earn uses an investment strategy to generate returns with the crypto you lend, by lending it to third parties or using it for staking activities. As a result of these activities, you run the risk of losing your lent crypto (or part of it).
BLOX Earn has a risk management policy and an investment strategy based on diversification to limit these risks as much as possible. Based on this policy and strategy, a maximum amount of crypto is lent per counterparty. In addition, each party is subject to due diligence requirements. Despite these measures, risks cannot be fully eliminated. It is therefore important to consider whether the Earn account suits you and whether you can and want to bear potential losses. It’s also important to fully understand the Earn account terms and conditions.
How does the Earn program work?
If you use the Earn account facilitated by BLOX, we will lend your crypto to BLOX Earn on your behalf and in accordance with the Loan Agreement. In the case of such a transfer, BLOX facilitates the so-called crypto-asset transfer service. BLOX also holds a MiCAR license for this service. In this situation, your crypto is no longer stored on behalf of BLOX in the segregated assets of Stichting BLOX Custody.
BLOX Earn operates a risk management system for the crypto you lend to them. BLOX Earn aims to generate higher returns on your crypto. To achieve this, your crypto may be lent to third parties or used for staking. When your crypto is lent onward by BLOX Earn, there is a risk that your crypto (or part of it) may be lost if a third party is unable to repay the loan or pay the promised returns. For more information about the compensation for BLOX Earn and BLOX, please refer to BLOX’s pricing policy.
The Earn program facilitated by BLOX and executed by BLOX Earn is not supervised by the AFM.
What does BLOX Earn do to limit risks as much as possible?
To limit the risks to your crypto as much as possible, BLOX Earn performs various checks when lending or staking crypto. These checks include due diligence, which looks at factors such as creditworthiness, liquidity, and market risk of third parties, assesses the structure of the third party, and reviews contractual terms. Based on these criteria, a rating is determined and a maximum amount of crypto is made available. Continuous monitoring then takes place to identify risks early, and diversification across counterparties is used to spread risk.