Coinbase_Сlosing_in_on_Xapo_purchase

Coinbase Сlosing in on Xapo purchase

 
SHARE:

A major cryptocurrency exchange Coinbase is in advanced talks to acquire the custody provider Xapo, the Block reports. If the deal is closed successfully, Coinbase would increase its presence in the custody business significantly.

Xapo was founded by a tech geek Federico Murrone and entrepreneur Wensceslao Casares in 2012. The startup had successfully closed two funding rounds so far, both in 2014, to collect in total $40 million. Investments firms such as Greylock Partners, Index Ventures, Benchmark and Fortress Investment Group took part in funding Series A.

Its main product is a cold storage vault custody of bitcoin, which is kept for free by Xapo. In exchange, the firm generates revenue by “enabling over-the-counter (OTC) trades for customers using the bitcoin under custody”.

“Sources cautioned that the deal has yet to close, and requested anonymity due to the confidentiality and fluid nature of the talks,” the Block story notes.

As reported, Coinbase has beaten a strong competition from Fidelity Digital Assets, as it is expected to pay around $50 million in cash for Xapo, in addition to “a contingent earn-out for remaining with the company”.

If this proves to be true, then Fidelity Digital Assets have been dealt a serious blow as the financial giant pushes to increase its presence in the digital assets industry. Its parent company, Fidelity Investments is one of the world’s largest financial services corporations with more than $7.3 trillion in client assets under its administration.

In related news, Fidelity Digital Asset is preparing to allow its customers to trade bitcoin within a few weeks, Bloomberg reports. After the launch of a custody service in March, Fidelity appears to be in the final stages of preparation to allow its customers to buy and sell bitcoin.

“We currently have a select set of clients we’re supporting on our platform. We will continue to roll out our services over the coming weeks and months based on our clients’ needs, jurisdictions, and other factors. Currently, our service offering is focused on Bitcoin,” said Fidelity spokeswoman Arlene Roberts.

In October last year, Fidelity’s CEO Abigail Johnson said that the company is working to make digital assets, such as bitcoin, more accessible to investors. Thus, news that Fidelity Digital Assets have rivalled Coinbase for the Xapo acquisition come as no surprise.