Xapo Introduces Interest-earning Accounts for Bitcoin and Fiat Currencies in the UK
Xapo Bank has achieved a significant milestone by becoming the first UK bank to offer interest-bearing bitcoin and fiat accounts. This accomplishment was made possible through the acquisition of a UK banking license via a passporting scheme facilitated by the Financial Conduct Authority (FCA), Prudential Regulation Authority (PRA), Bank of England, and Gibraltar authorities.
On Xapo Bank’s platform, users can earn 1% interest on bitcoin without the need to stake, lend, or lock up their assets. While the source of this yield has not been disclosed, customers can also utilize Xapo’s debit card to spend bitcoin, make GBP payments to UK accounts, invest in S&P 500 stocks, purchase select cryptocurrencies, and utilize stablecoin payment rails with USD accounts.
Securing UK banking licenses has been a challenge for fintech companies, but Xapo Bank, which has been regulated by the Gibraltar Financial Services Commission since 2021, now meets the regulatory standards of the UK. This achievement enables Xapo to offer its services directly in the UK market.
Established in 2013, Xapo Bank has evolved from a Bitcoin wallet to an e-money wallet and now operates as a “digital-first” retail bank and virtual asset service provider (VASP) custodian. The bank guarantees USD deposits up to €100,000 and leverages multi-party computation (MPC) technology to enhance security.
In a partnership with Lightspark, co-founded by former PayPal President David Marcus, Xapo enabled bitcoin deposits via the Lightning Network in May.
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The UK government has been actively working towards providing regulatory clarity for crypto firms, with the Treasury releasing proposals for future crypto regulation. Despite some firms exiting the market due to new FCA crypto advertising regulations, the UK remains dedicated to establishing itself as a global hub for cryptocurrency innovation.
In 2021, the FCA prohibited the sale of derivatives and exchange-traded products to retail investors. However, crypto ETNs for professional investors were introduced on the London Stock Exchange in May.
Xapo Bank’s CEO, Seamus Rocca, commented, “We are excited to expand our presence in the UK, assisting valuable members in diversifying their wealth through bitcoin and secure banking.”
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