Cryptocurrency firm Coinbase acquires Xapo institutional custody service, a service best known for storing Bitcoins in a vault under a Swiss mountain.
Although the exchange did not post any figures in the official announcement, the deal was sealed at $55 million, according to Fortune. For several months, Coinbase was competing with Fidelity to acquire the Swiss Bitcoin custodial company. The confirmation of the deal has given the exchange a boost for its global expansion.
The deal has been ongoing since May, but sensitivities surrounding this deal — such as the transferring of customer assets and ownership of Xapo‘s vaults — have delayed the process, according to Jeff John Roberts at Fortune.
New acquisition puts Coinbase Custody’s AUC at $7 billion
According to the announcement, the new acquisition puts Coinbase Custody’s AUC (assets under custody) at $7 billion. Xapo is one of the oldest Bitcoin custodial services in the world. Back in 2018, the company gained BitLicense from the New York Department of Financial Services (NYDFS), to operate a crypto exchange in the state.
According to a Fortune report, a majority of Xapo’s clients agreed to transfer their assets to the Coinbase Custody, which will put more than 514,000 Bitcoins in the exchange’s vault. There are still some major clients who hold combined assets worth $3.5 billion. If they also move their digital assets to the custodial of the San Francisco-headquartered exchange, it will hold over 860,000 Bitcoins.
Coinbase also revealed that it has more than 120 clients for its custodial business who are spread across 14 countries. Despite the $55 million acquisition deal, Xapo will continue to retain a few of its businesses including its retail exchange and its Switzerland-based Bitcoin vault.
“Custody is a critical step toward the institutionalization of crypto economy. It’s likely to start off small—maybe a few billion under custody—but it will grow quickly to a point that it’s a meaningful piece of stable, recurring revenue for the company,” Brian Armstrong, chief executive of Coinbase, told Fortune.
In the meantime, in the United Kingdom, Coinbase is facing serious issues with its banking partner. On Wednesday, AtoZMarkets reported that the U.K.-based banking giant Barclays has ended its banking ties with the exchange, and in the process lost its access to Faster Payments Scheme (FPS) for fiat settlements.
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