Xapo Bank Launches Interest-Bearing Bitcoin Accounts in the UK
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Xapo Bank, a digital bank licensed in Gibraltar for cryptocurrency business, has extended its services to the United Kingdom. It is now the first licensed bank in the UK to provide an account that earns interest in both USD and Bitcoin (BTC).
This expansion aligns with the UK’s ambition to become a leading player in crypto and blockchain technology. Recent estimates indicate that 10% of UK adults owned cryptocurrency in 2023.
Xapo Bank Aims To Expand Its Services And Establish Itself In The UK Market
The passporting scheme is a plan that lets firms in Gibraltar use their banking license in the UK. This is made possible by the Bank of England, the Prudential Regulation Authority (PRA), the Financial Conduct Authority (FCA), and Gibraltar authorities.
A statement shared with The Block says Xapo’s platform gives 1% interest on Bitcoin without needing to stake, lend, or lock up the assets. The company did not say where the interest would come from.
Users can use their Bitcoin with Xapo’s debit card, make direct GBP payments to UK bank accounts, and invest in S&P 500 stocks. They can also buy some cryptocurrencies and use stablecoin payment services with USD bank accounts.
Fintech firms have had a hard time getting UK banking licenses recently. But the crypto-friendly app Revolut just got a new banking license from UK regulators. Since 2021, Xapo Bank has been overseen by the Gibraltar Financial Services Commission and could offer some services in the UK, but it wasn’t a regulated UK bank until now.0
Xapo Bank Allows Users To Make Bitcoin Deposits Through The Lightning Network
Founded in 2013, Xapo Bank started as a Bitcoin wallet, then became an e-money wallet. It later turned into a “digital-first” retail bank and virtual asset service provider (VASP) custodian.
Xapo uses a real bunker along with MPC technology and ensures USD deposits are protected up to €100,000. MPC, or multi-party computation, is a cryptographic method that enhances existing multi-sig techniques by splitting wallet keys between several parties.
In May, Xapo Bank allowed users to make Bitcoin deposits through the Lightning Network, working with Lightspark.
In June 2023, then UK Prime Minister Rishi Sunak said he wanted to make the rules clear for how crypto firms should register and operate in the UK. This was part of his goal for the UK to become a major center for web3.
Some progress has been made on the rules for crypto. Last October, the UK Treasury released its final proposals for how crypto should be regulated. This shows the government’s plan to include crypto asset activities within financial services rules for the first time.
