US-based Crypto Exchange Coinbase has announced the acquisition of Xapo’s institutional business. Xapo is a Hong Kong-based cryptocurrency firm that provides wallets, cold storage of Bitcoins and also Bitcoin debit cards. Reportedly, the deal was worth $55 million.
Coinbase.com is one of the most trusted crypto exchanges in the US and Europe. Reportedly, Coinbase outbid Fidelity in the race for Xapo. The report also cited that while some other firms placed higher bids, Coinbase provides the level of “security or regulatory credentials to be acceptable to Xapo’s clients.”
Coinbase Pro and Coinbase Custody service institutional clients (high-volume investors) only. They claim best-in-class security and insurance for their custody platforms.
By acquiring Xapo’s custodial arm, Coinbase now became the largest crypto custodian in the world. It has a total Asset Under Custody (AUC) worth $7 billion and serves over 150 clients in 14 nations.
Coinbase Custody AUC
Xapo, under CEO Wences Casares, has primarily concentrated its efforts around Bitcoin. Reportedly, it will focus on the retail adoption of Bitcoin.
Future Plans of Coinbase and it’s Custodial Arm
Moreover, Coinbase is planning to expand its custody business to other crypto assets and provide banking services as well. It is planning to include ‘staking’ which align with the recent additions to Coinbase of Tezos and Algorand. The CEO of Coinbase Custody Sam McIngvale told the media,
“Moving forward, the next phase of crypto custody is a much broader suite of services serving a much broader set of crypto assets,”
Sam also hinted at the beginning of a revenue stream from the custody from lending and borrowing. This move will necessarily have Coinbase provide banking and other traditional Financial Service.