Cryptocurrency exchange Coinbase is reportedly in advanced talks to acquire crypto custody firm Xapo for roughly $50 million.
Xapo offers a BTC wallet combined with a cold storage vault and a Bitcoin-based debit card. The Hong Kong-based company stores its BTC in secret bunkers located on five continents and is said to be the largest custodian of Bitcoin in the world. Sources tell The Block the deal has yet to close.
“According to sources, Coinbase and Fidelity Digital Assets have been locked in a neck-and-neck race for the prized asset for the past few weeks, with Coinbase ultimately prevailing.”
Coinbase is the largest cryptocurrency exchange in the US. The San Francisco-based firm has acquired a total of 14 companies, including peer-to-peer trading platform Paradex and crypto micro-tasks platform Earn. It continues to expand its crypto offerings around the globe to create an open, blockchain-based global financial system.
As the cryptosphere matures with a growing number of new solutions and services from major players, including ErisX, Fidelity, Etrade, Square and TD Ameritrade, Coinbase and all of its competitors will increasingly need to focus on security and rock solid trustworthiness in order to bring in big investors.
Speaking in New York at the crypto and blockchain industry conference Consensus, Coinbase CEO Brian Armstrong describes the company’s goals to transform the financial services industry as a total overhaul and not just a renovation.
“The most important thing to understand about the cryptoeconomy is that we’re not simply righting the wrongs of finance 1.0. We’re creating an entirely new way to access financial services.”
Launched in March 2014 to address Bitcoin accessibility and security, Xapo reports that it holds $10 billion in crypto assets for its more than 1.5 million customers around the world. By using a mobile app, users can access their Xapo Wallet, transferring funds to and from the Xapo Vault.
Billed as a “digital banking alternative right in your pocket” and described as the “Fort Knox of Bitcoin storage” by the Wall Street Journal, Xapo stores customer funds in offline, encrypted servers that are never connected to the internet.
According to the Xapo team,
“Xapo’s secure Vaults are housed in high-security installations, including deep within a decommissioned Swiss military bunker that offers uniquely robust protection against physical theft. Xapo’s redundant, global network of storage Vaults ensures that no single security breach would ever compromise your account. A satellite-based “x-ray” of our terrestrial network helps Xapo continually monitor and validate system-wide security.”