Coinbase Custody, the U.S.-based crypto exchange Coinbase’s crypto custody service for institutional investors, acquired crypto wallet provider Xapo’s institutional custody business.
The transaction value was not disclosed by Coinbase. But Fortune, quoting a person familiar with the matter, said Coinbase paid $55 million, higher than what Fidelity had proposed.
The acquisition has grown Coinbase Custody’s Assets Under Custody (AUC) to over $7 billion in Bitcoin (BTC) and crypto assets, which is stored on behalf of more than 120 clients in 14 different countries. In May, AUC had crossed only the $1 billion mark.
Coinbase Custody, which launched its cryptocurrency custody service for institutional investors in July 2018, began offering secure custody services in both the US and Europe for six of the largest cryptocurrencies – Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH), Ethereum Classic (ETC), Ripple (XRP) and Litecoin (LTC).
It was granted the license in October 2018 by the New York Department of Financial Services (NYDFS) to operate as an independent Qualified Custodian for virtual currencies or cryptocurrencies in the state of New York.
The addition of Xapo’s institutional custody business will be complementary to Coinbase Custody’s services as Xapo also provides services to institutional clients such as hedge funds, family offices, endowments and proprietary trading desks, in the U.S. and Europe.
Xapo is licensed and regulated by the Gibraltar Financial Services Commission under the Financial Services (Electronic Money) Regulations 2011 as an “Electronic Money Institution.” It was granted a European e-money license in Gibraltar in July 2017 to provide electronic fiat money custodial and transfer services.
A year later in July 2018, Xapo was awarded a BitLicense by the NYDFS as a formal approval to operate in the state of New York as a regulated Bitcoin business. Xapo’s BitLicense was the 6th to be awarded out of the twenty granted since the initiation in August 2015.
Xapo has raised $40 million from Benchmark, Greylock Partners, Index Ventures, Fortress Investment Group, Ribbit Capital and Emergence Capital Partners.
Zug, Switzerland-based Xapo was initially headquartered in San Francisco, California, but moved operational base in early 2017 to the crypto valley Zug, which provides crypto-friendly regulations.