Gibraltar-based Xapo Bank has formally entered the UK financial landscape after securing a local banking license. The bank’s groundbreaking move includes the introduction of interest-bearing accounts for both Bitcoin and fiat currencies, a first in the United Kingdom.
Entering UK Markets
As announced on August 5, Xapo Bank now offers unique banking services that cater specifically to users interested in holding Bitcoin. These services include a combined interest-bearing account in United States dollars and Bitcoin. Xapo’s customers can now transfer up to 1 million British pounds ($1.28 million) and make payments to UK-based wallets and bank accounts. Notably, the Bitcoin account yields 1% interest without requiring staking, lending, or locking up assets.
Xapo Bank has also integrated a “universally accepted” debit card, allowing Bitcoin account holders to spend their cryptocurrency like fiat money. In addition to this, customers can invest in S&P 500 stocks or acquire select cryptocurrencies. The bank has further enhanced its offering by incorporating stablecoin payment rails linked with US dollar bank accounts.
Regulatory Challenges and Opportunities
Seamus Rocca, CEO of Xapo Bank, acknowledged the challenges faced in obtaining the banking license for the UK market. However, he expressed eagerness to expand local membership. Joey Garcia, Xapo Bank’s director and head of regulatory and public affairs, highlighted the unique opportunity to usher in the future of digital finance in the UK. He emphasized that the UK is rapidly becoming a global hub for cryptocurrency innovation, thanks to its promising regulatory framework, dynamic financial ecosystem, and rich talent pool.
UK Crypto Landscape
The UK has been proactive in establishing itself as a leader in the cryptocurrency and blockchain sectors. According to recent estimates by the Financial Conduct Authority, 10% of adults in the UK held cryptocurrencies in 2023. Xapo Bank’s entry into the UK market isn’t an isolated event. On July 25, the global neobank and fintech company Revolut secured its UK banking license after a rigorous three-year regulatory process. This milestone solidified Revolut’s position in its home market. Additionally, in mid-July, the cryptocurrency exchange Kraken expanded its custody services for UK customers.
Future Prospects
The entry of Xapo Bank into the UK market marks a significant milestone in the evolving landscape of digital finance. By offering interest-bearing accounts for both Bitcoin and fiat currencies, Xapo Bank is setting a new standard in the banking sector. The UK’s favorable regulatory environment and growing interest in cryptocurrency make it an attractive destination for innovative financial services. As more companies like Xapo and Revolut gain regulatory approval, the UK is poised to become a global leader in cryptocurrency and blockchain technology.
