Coinspeaker
Xapo Bank to Offer Interest-Bearing Bitcoin Accounts in UK
Xapo Bank announced on August 5, 2024, that it had extended its banking license to the United Kingdom, becoming the first UK bank to offer interest-bearing accounts for both bitcoin and fiat currencies. The Bank achieved this by successfully navigating the UK’s passport scheme, with approval from the Financial Conduct Authority (FCA), the Prudential Regulation Authority (PRA), the Bank of England, and Gibraltar authorities.
Xapo Bank provides a 1% interest yield on Bitcoin without requiring staking, lending, or locking up assets. Although details on how these yields are generated remain unclear, this feature is expected to attract many users. Xapo’s platform also enables users to spend bitcoin via a debit card, make direct GBP payments, invest in the S&P 500, acquire select cryptocurrencies, and access stablecoin payment rails with USD accounts.
Bitcoin Banking Breakthrough in UK
Securing a UK banking license has been a challenging endeavor for fintech companies, with many struggling to meet stringent regulatory requirements. Xapo Bank, regulated by the Gibraltar Financial Services Commission since 2021, could previously offer certain services in the UK but was not recognized as a regulated UK bank.
Xapo Bank CEO Seamus Rocca highlighted the importance of this milestone:
“This means we are allowed to offer our banking services directly to the UK market. Achieving this is no easy feat and shows we meet the UK’s high regulatory standards. We are eager to expand our membership in the UK, assisting valuable members in diversifying their wealth through bitcoin and secure banking.”
Since its founding in 2013, Xapo Bank has transformed from a Bitcoin wallet into a digital-first retail bank and virtual asset service provider (VASP) custodian. The bank uses multi-party computation (MPC) technology to boost security by splitting wallet keys among several parties.
Xapo protects USD deposits up to €100,000 and enhances security by combining physical bunkers with MPC. In May 2024, Xapo Bank began accepting Bitcoin deposits through the Lightning Network, thanks to a partnership with Lightspark, which former PayPal President David Marcus co-founded.
UK Crypto Hub Awaits Labour’s Stance
In June 2023, former Conservative Prime Minister Rishi Sunak stressed the need for clear regulations to make the UK a global Web3 hub. The UK Treasury has proposed 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 rapidly becoming a leading center for cryptocurrency innovation. He highlighted the UK’s strong regulatory framework, dynamic financial environment, and skilled workforce.
Additionally, Garcia emphasized that Gibraltar-regulated firms, through the Bank of England’s engagement, gain distinctive market access. Xapo Bank plans to expand its banking license into the UK and is enthusiastic about increasing its membership in the region.
