Key Points
- Xapo Bank expands its banking license to the UK, offering interest-bearing accounts for Bitcoin and fiat currencies.
- The bank provides a 1% interest yield on Bitcoin without requiring staking, lending, or locking up assets.
Xapo Bank declared on August 5, 2024, that it has broadened its banking license to the United Kingdom. This makes it the first UK bank to offer interest-bearing accounts for both bitcoin and fiat currencies. The bank accomplished this by successfully maneuvering through the UK’s passport scheme, receiving approval from the Financial Conduct Authority (FCA), the Prudential Regulation Authority (PRA), the Bank of England, and Gibraltar authorities.
The bank offers a 1% interest yield on Bitcoin without necessitating staking, lending, or locking up assets. Although it remains unclear how these yields are generated, this feature is anticipated to attract a significant number of users. Xapo’s platform also allows users to spend bitcoin via a debit card, make direct GBP payments, invest in the S&P 500, purchase select cryptocurrencies, and access stablecoin payment rails with USD accounts.
Bitcoin Banking Breakthrough in UK
Acquiring a UK banking license has been a difficult task for fintech companies, with many finding it challenging to meet strict regulatory requirements. Xapo Bank, regulated by the Gibraltar Financial Services Commission since 2021, was able to offer certain services in the UK previously but was not recognized as a regulated UK bank.
Xapo Bank CEO Seamus Rocca emphasized the significance of this achievement, stating that it allows the bank to offer its services directly to the UK market. He added that it demonstrates the bank’s compliance with the UK’s high regulatory standards and expressed eagerness to expand their membership in the UK, assisting valuable members in diversifying their wealth through bitcoin and secure banking.
Since its establishment in 2013, Xapo Bank has evolved from a Bitcoin wallet into a digital-first retail bank and virtual asset service provider (VASP) custodian. The bank employs multi-party computation (MPC) technology to enhance security by dividing wallet keys among several parties.
Xapo safeguards USD deposits up to €100,000 and boosts security by merging physical bunkers with MPC. In May 2024, Xapo Bank started accepting Bitcoin deposits through the Lightning Network, thanks to a collaboration with Lightspark, co-founded by former PayPal President David Marcus.
UK Crypto Hub Awaits Labour’s Stance
In June 2023, former Conservative Prime Minister Rishi Sunak emphasized the need for clear regulations to make the UK a global Web3 hub. The UK Treasury has suggested regulations for crypto activities in financial services. However, the current Labour government led by Prime Minister Keir Starmer has not yet clarified its position on crypto regulation.
Joey Garcia, Director and Head of Regulatory and Public Affairs at Xapo Bank, stated that the UK is quickly becoming a leading center for cryptocurrency innovation. He underscored the UK’s robust regulatory framework, dynamic financial environment, and skilled workforce.
Furthermore, Garcia highlighted that Gibraltar-regulated firms, through the Bank of England’s engagement, gain unique market access. Xapo Bank intends to extend its banking license into the UK and is excited about increasing its membership in the region.
