Coinbase Custody Becomes World Leader with XAPO Acquisition
Coinbase will expand its services after acquiring the institutional custodial business of the XAPO wallet provider.
Coinbase Custody is set to become the world’s largest provider of crypto custodial services, after acquiring XAPO’s institutional storage business, the company announced in a blog. The acquisition arrives after months of preparation, and puts $7 billion’s equivalent of assets under the control of the Coinbase brand.
Coinbase Custody targets large-scale customers, as the assets in storage belong to just 120 individuals from 14 countries.
“From the start, our goal has been to build the trusted foundation for institutional investment in Bitcoin (BTC) and crypto assets in general. We’re thrilled to help enable some of the tremendous demand for this emerging asset class,” commented Coinbase.
Custodial services are seen as key to inviting institutional investors. The Coinbase service has existed for little more than a year, going through significant growth in 2019. XAPO is one of the oldest multi-asset wallets, improving its security and adoption since 2014.
XAPO is also one of the handful of BitLicense holders, capable of reaching out to New York-based clients, as well as holding a money manager license in Gibraltar. With this acquisition, Coinbase will expand fully transparent, legalized crypto services.
“Coinbase is committed to serving a wide spectrum of institutional clients including hedge funds, family offices, endowments and proprietary trading desks as they decide to onboard crypto. Our institutional range of products provides a seamless, powerful and compliant ecosystem for our clients to trade, store and interact with their crypto,” commented Coinbase.
Custodial services diminish the risk of human error, and offer cold storage solutions for large wallets. At the same time, Coinbase Custody has added secondary services, such as Tezos “baking”, other forms of staking and even crypto-based loans to verified clients.
Coinbase reveals a marked growth of assets under custody in August 2019, growing from $2 billion to $7 billion’s equivalent in about a month. In 2019, talks of Bitcoin-based exchange-traded funds continue, while the Bakkt exchange has stated the launch of its physical-delivery futures is imminent. This may lead to increased demand for storing BTC and other digital coins.