A securities broker license has been granted to Gibraltar-based digital asset bank Xapo, enabling it to offer customers in Europe the option of trading S&P 500 companies like Apple in addition to its cryptocurrency wealth management services.According to Xapo CEO Seamus Rocca, the company’s recently granted Markets in Financial Instruments Directive (MiFID) license adds another tenet to its vision, which is much more focused on straightforward, long-term investing than the kind of speculative trading strategies that cryptocurrency is known for.
“Our target customer is not your stereotypical 25-year-old Gen Z, who wants to trade crypto,” Rocca said. “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.”
When Xapo was launched in 2013, it had a wallet, a cold storage custody vault, and a reserve of 30,000 bitcoin (BTC). Later, it established a Gibraltar office under its virtual asset service provider (VASP) structure.Since starting the procedure in 2019, Xapo has received a banking license, principal membership with Visa and Mastercard, as well as membership in SWIFT (the international mechanism by which banks transfer money to one another).As a result, the company has access to money market accounts and can communicate with correspondent banks directly rather than through payment processors or other third parties.
Bank interest is increasing in Europe, in part due to the Markets in Crypto Assets, or MiCA, regulation.However, Xapo abandoned institutional crypto adoption when it sold its enterprise custody business to Coinbase back in 2017, choosing instead to focus on consumers and the spirit of financial independence associated with bitcoin.
“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.
Xapo is used to going against the grain. After last year’s crypto collapses and things like FTX, “everyman and his dog” now wants to use non-custodial wallets. “I think that’s a bad idea, Rocca said. “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.”
Rocca also disclosed that Xapo will soon break the mold in another way, notably by abandoning its long-standing policy of solely supporting bitcoin.
“We’ve always been bitcoin-only, but so many people have asked us about Ethereum that we’re adding Ethereum to the portfolio,” Rocca said. “So you’ll be able to store Ethereum and buy and sell it at Xapo, probably in about a month.”