The Markets in Financial Instruments Directive (MiFID) license will soon allow the firm to offer S&P 500 stocks. In addition, Xapo, which has always been bitcoin-only, plans to add Ethereum’s ETH.
Gibraltar-based digital asset bank Xapo has gotten a securities broker license, meaning it will be able to offer customers in Europe the ability to trade S&P 500 stocks like Apple alongside the company’s crypto wealth management offering.
Xapo’s recently granted Markets in Financial Instruments Directive (MiFID) license adds another plank to the firm’s vision, which is much more about straightforward, long-term investing versus the sort of speculative trading strategies crypto is famous for, Xapo CEO Seamus Rocca said in an interview.
“Our target customer is not your stereotypical 25-year-old Gen Z, who wants to trade crypto,” Rocca said. “It’s a slightly older demographic who bought bitcoin a few years ago to hold and to be like a pension pot, or perhaps to buy a property when the price is right. They want a diversified portfolio perhaps with some stocks, a savings account that earns interest, as well as a bitcoin allocation.”
Starting out with a wallet, a cold-storage custody vault and a reserve of 30,000 bitcoin (BTC) back in 2013, Xapo later set up in Gibraltar under its virtual asset service provider (VASP) framework. Since beginning the process in 2019, Xapo has been granted a banking license, obtained principal membership with Visa and Mastercard as well as membership in SWIFT (the global system through which banks send money to each other). This means the firm can engage directly with correspondent banks, not via payment companies or third parties, and have access to money market accounts.
Europe is seeing growing interest from banks, driven to some degree by the Markets in Crypto Assets, or MiCA, regime. But Xapo turned away from institutional crypto adoption when it sold its enterprise custody business to Coinbase back in 2017, preferring to stick to retail and bitcoin’s ethos of financial freedom.
“Banks are adopting crypto, but only for institutional services. Not for people like you and me. That’s where I think we were breaking the mold. We could see the need to build a bank that bridges crypto with day-to-day use cases because traditional banks weren’t going to do it,” Rocca said.
Xapo is used to going against the grain. After last year’s crypto collapses and things like FTX, “everyman and his dog” now wants to use non-custodial wallets. “I think that’s a bad idea, Rocca said. “People don’t keep cash in a suitcase with a four-digit PIN under their bed. Why would you do that with your bitcoin? You can keep it on a laptop or a pendrive, but it’s risky. And when you want to transact with it, you have to cross the bridge to traditional financial services.”
Rocca also revealed Xapo will soon be breaking the mold in another way: namely the firm’s long-standing strategy of only offering a single cryptocurrency: bitcoin.
“We’ve always been bitcoin-only, but so many people have asked us about Ethereum that we’re adding Ethereum to the portfolio,” Rocca said. “So you’ll be able to store Ethereum and buy and sell it at Xapo, probably in about a month.”