Xapo, a digital asset bank based in Gibraltar, has recently obtained a European broker license, allowing the firm to offer its clients the ability to trade S&P 500 stocks, such as Apple, alongside its crypto wealth management offering. In addition to this, Xapo plans to expand its services by adding Ethereum’s ether (ETH) to its portfolio, which customers can store and buy or sell at Xapo in about a month. The license adds another dimension to Xapo’s vision, which is more focused on long-term investing rather than speculative trading strategies.
Targeting a Different Demographic
Xapo CEO, Seamus Rocca, stated that their target customers are not the stereotypical 25-year-old Gen Z who want to trade crypto. Instead, they are aiming for a slightly older demographic who bought bitcoin a few years ago to hold it as a pension pot or to buy a property when the price is right. These customers want a diversified portfolio that includes stocks, a savings account that earns interest, as well as a bitcoin allocation.
Xapo’s Journey and Expansion
Xapo started in 2013 with a wallet, a cold-storage custody vault, and a reserve of 30,000 bitcoin (BTC). The firm later set up in Gibraltar under its virtual asset service provider (VASP) framework. Since beginning the process in 2019, Xapo has been granted a banking license and obtained principal membership with Visa and Mastercard, as well as membership in SWIFT. This means the firm can engage directly with correspondent banks, not via payment companies or third parties, and have access to money market accounts.
Offering Stocks and Ethereum
Xapo’s move to offer stocks and Ethereum to its clients comes at a time when Europe is seeing growing interest from banks, driven to some degree by the Markets in Crypto Assets (MiCA) regime. However, Xapo turned away from institutional crypto adoption when it sold its enterprise custody business to Coinbase back in 2017, preferring to stick to retail and bitcoin’s ethos of financial freedom.
Rocca said, “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.”
Going Against the Grain
Xapo is known for its unconventional approach. After last year’s crypto collapses and the rise of platforms like FTX, many people now want to use non-custodial wallets. Rocca believes this is a bad idea, stating, “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.”
By obtaining a European broker license and expanding its offerings to include stocks and Ethereum, Xapo is positioning itself as a unique player in the digital asset banking space. Catering to an older demographic looking for long-term investments and financial freedom, Xapo aims to bridge the gap between traditional financial services and the world of cryptocurrency. As interest in crypto assets continues to grow, Xapo’s innovative approach may prove to be a successful strategy for attracting and retaining customers looking for a more diversified and secure investment portfolio.
