Xapo is a service that is known to store it’s clients Bitcoins in a vault that is present under the Swiss Mountains. This acquisition is a part of the aggressive push by Coinbase to expand it’s custody services for the clients. This deal can lead to Coinbase storing 5% of all Bitcoins stored in circulation.
Coinbase, after this deal, has over $7 billion worth of crypto assets under their management. Launched in 2013, Xapo will continue to provide its exchange business that will allow ordinary consumers to buy and sell Bitcoin.
Wences Casares, CEO of Xapo, revealed that many firms placed higher bids than Coinbase. The reason why they chose Coinbase is because of their security and regulatory credentials which others lacked. The existing clients of Xapo preferred Coinbase over others; the list of clients also included Grayscale Investments, another firm responsible for the management of Bitcoin and other crypto investments for wealthy investors.
Sources have said that majority to Xapo’s clients have agreed to transfer the assets they have to Coinbase. This transfer will give Coinbase control of over 514,000 Bitcoins. If the remaining customers agree to do the same, Coinbase will have about 860,000 Bitcoins in their custody.
Big Steps by Coinbase
Coinbase has been using the profits from the trading commissions as the way to keep their company running and profits rolling in. With the acquisition of Xapo, Coinbase can now expand their new custody service to its customers, which will include regulatory support and insurance support for their investments.
Coinbase Custody will allow the customers to plug into investing tools from other companies and all the customer assets will be fully backed by the insurance syndicate, Lloyd’s from London.