By
Mayowa Adebajo
May 10th, 2023
Xapo is also expected to expand beyond its Bitcoin-only by allowing customers to trade Ether as well.
Crypto-friendly bank Xapo has been granted a securities broker license that allows it to offer its European clients the ability to trade S&P 500 stocks like Apple along with its crypto asset management offering. Markets in Financial Instruments Directive (MiFID) license will enable the bank to expand beyond the speculative trading strategies used in crypto into more long-term investment strategies.
Commenting on the news, Xapo CEO Seamus Rocca said in an interview:
“Our target customer is not your stereotypical 25-year-old Gen Z, who wants to trade crypto […] It’s a slightly older demographic who bought bitcoin a few years ago to hold and to be like a pension pot, or perhaps to buy a property when the price is right. They want a diversified portfolio perhaps with some stocks, a savings account that earns interest, as well as a bitcoin allocation.”
Xapo was launched in 2013 with only a wallet, a cold-storage custody vault and a 30,000 Bitcoin cache. It then went on to set up in Gibraltar as a virtual asset service provider (VASP). The bank has gone on to acquire a banking license, principal membership with Visa and Mastercard and membership in SWIFT – the global messaging system used by financial institutions to send information and money to each other. This allows the bank to engage directly with correspondent banks and have access to money market accounts.
Europe’s Markets in Crypto Assets (MiCA) regime, which regulates crypto-asset issuance and service provision in the region, has been attracting banks to the region. Xapo, however, took a step away from driving institutional crypto adoption with the 2017 sale of its enterprise custody business to Coinbase. The firm instead decided to stick to retail investment and adhere to Bitcoin’s ‘financial freedom for all’ code.
“Banks are adopting crypto, but only for institutional services. Not for people like you and me. That’s where I think we were breaking the mold. We could see the need to build a bank that bridges crypto with day-to-day use cases because traditional banks weren’t going to do it,” Rocca said.
The CEO also commented on the increased calls for and adoption of non-custodial wallets following the collapse of major crypto firms last year. He said:
“I think that’s a bad idea. People don’t keep cash in a suitcase with a four-digit PIN under their bed. Why would you do that with your bitcoin? You can keep it on a laptop or a pendrive, but it’s risky. And when you want to transact with it, you have to cross the bridge to traditional financial services.”
The exec also revealed that due to popular demand, Xapo will soon be expanding beyond its Bitcoin-only by allowing customers to trade Ether as well. “So you’ll be able to store Ethereum and buy and sell it at Xapo, probably in about a month,” added the CEO.
