One of the earliest custodial services for Bitcoin, Xapo has announced that it will stop offering its services in the United States from March of 2021. Emails have been sent by the custodial firm to its American clients to inform them about its closure plans. Xapo has also told its clients to withdraw their funds as soon as possible before the deadline in March. Earlier, the company had stopped offering Bitcoin transactions to US customers on its wallet. The customers were informed by the firm that its subsidiary, Xapo Inc., was leaving the US market so they will be closing down all customer accounts.
Clients of the custodial service provider were asked to move all their funds in the Xapo wallets to an external Bitcoin address. The company is also making changes to its business model, as it will switch to offering clients digital banking services rather than providing a custodial service. Chief executive officer and founder of Xapo, Wences Casares said that the primary goal of the company is to provide their client’s life savings with top-notch security, especially where emerging markets are concerned. He further added that the company is targeting people who have more than $30,000 and less than $1 million in savings and don’t want to keep all of their savings in their local currency or in the country.
With this amount of savings, these people are unable to take advantage of international private banking services. The CEO said that these are the kind of clients that Xapo is looking at. A banking license was recently obtained by the company in Gibraltar. However, the company realized that they have to create a separate organization in order to fulfill all US banking regulations, as the US market simply doesn’t have a strong enough demand for this kind of service. According to Casares, they had taken the decision to leave the US market because it had been in the best interest of the firm.
The CEO stated that staying in the US market demanded a lot more effort and time investment, along with a separate organization within Xapo. Even after making all the efforts, the end product wouldn’t be the same as what is being currently offered on an international scale. Therefore, it is better for the company to stop providing its services in the US in order to ensure its growth in the long run.
The company’s headquarters are based in Switzerland and it was amongst the original members of the Libra Association, established by Facebook, which has now been renamed to Diem Association. Xapo still remains a member of this association, even though a lot of top supporting firms have taken their exit. Last year, a major decision was made by Xapo when it decided to sell off its institutional business for $55 million to Coinbase, a top cryptocurrency exchange in the US. However, everything is not going well for the company because it is currently facing a lawsuit in the United States, as some of its clients stored stolen Bitcoin on their wallets.