Xapo Bank, based in Gibraltar, launched a new US dollar lending service backed by Bitcoin on March 18. This opportunity is targeted at long-term Bitcoin holders looking to access cash from their cryptocurrency without selling it.
Key Features of Xapo's New Lending Offer
The service is aimed at pre-approved customers who can access loans of up to $1 million while retaining their cryptocurrency. According to Seamus Rocca, CEO of Xapo Bank, Bitcoin serves as an ideal form of collateral due to its borderless nature, high liquidity, 24/7 availability, and divisibility. A key feature of Xapo's loan offering is the non-rehypothecation of client assets. All collateral is securely stored in Xapo's vault using institutional-grade custody technology.
Benefits and Terms of the Loans
Clients can choose from several repayment schedules: 30, 90, 180, or 365 days. The bank does not charge penalties for early repayment, providing flexibility for borrowers in managing their loans. The service is available to investors in regions including Europe and Asia, but excludes US residents. Eligibility primarily depends on the amount of Bitcoin holdings and the duration of its ownership.
Context and Global Trends
The launch comes in the wake of significant setbacks in the crypto lending industry in 2022, when providers like Celsius and BlockFi collapsed following the Terra crash and subsequent market downturn. Rocca noted that borrowers are now looking for platforms with proven custody track records and transparent solutions. Xapo Bank is regulated by the Gibraltar Financial Services Commission, and its banking license will be passported to the United Kingdom in 2024.
The launch of Xapo Bank illustrates the growing adoption of cryptocurrency solutions globally. Initiatives like the legislative proposal in Brazil regarding partial wage payments in cryptocurrency highlight changes in global financial operations and the integration of digital currencies.
