Coinbase has completed the acquisition of Xapo, a cryptocurrency custodial service provider. The deal that had first been reported in May was finished with a $55 million fee. According to an undisclosed source, Coinbase was able to acquire Xapo after outbidding Fidelity, which is an investment giant. However, the Xapo CEO pointed out that it had received higher bids from other firms, but the firms lacked the security acceptable by their clients.
This acquisition increases Coinbase’s total digital asset value to over $7 billion. A majority number of Xapo clients have also agreed to move their assets to Coinbase and the deal has made Coinbase become the largest custodian for blockchain and Bitcoin assets in the world.
Xapo was primarily founded to enhance the storage of Bitcoin, and it has been able to provide secure storage of ‘investor’s Bitcoins since 2014. With the security, Coinbase hopes that it will build a trusted platform for institutional Bitcoin investment.
“From the start, our goal has been to build a trusted foundation for institutional investment in bitcoin and crypto assets in general. We are thrilled to help enable some of the tremendous demand for this emerging asset class,” said the Coinbase custody team.
However, Xapo will retain its retail business of buying and selling Bitcoin and its founder and CEO, Wences Casares will maintain his CEO position.
According to an interview with Fortune, Xapo’s CEO pointed out that the custody business sold to Coinbase was never Xapo’s core focus, and it only developed when the demand for secure Bitcoin storage was high. He also pointed out that they needed to sell the custodial service since it was becoming difficult to carry out both institutional business and consumer business.
“‘It’s hard to do a consumer business well at the same time as an institutional business. Earlier this year, we looked for a home for it,” said Casares.
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