San Francisco-based cryptocurrency exchange Coinbase has asserted its dominance in the cryptocurrency custody niche by acquiring Xapo for $55 mln, Fortune reports. As a result of this deal, Coinbase will be responsible for storing a staggering 5 percent of Bitcoin’s circulating supply.
Coinbase’s digital wealth
An anonymous source told Fortune that the Brian Armstrong-led exchange has managed to snatch the deal from mutual fund giant Fidelity Investments, which has been keen on crypto for a long time.
As reported by U.Today, Grayscale recently transferred $2.7 bln from Xapo, its long-time partner, to Coinbase Custody, which is considered to be one of the biggest cryptocurrency transactions ever.
Xapo will still control its ultra-secure vault in the Swiss Alps that has been grabbing headlines in the mainstream media for a long time. Wences Casares will also remain the firm’s CEO.
Shifting focus to retail
From now on, Xapo will solely focus on operating its Bitcoin exchange after ceding ground to Coinbase in the crypto custody race.
It’s hard to do a consumer business well at the same time as an institutional business. Earlier this year, we looked for a home for it, said Casares.
Its retail business enjoys a growing popularity in Latin America, and Casares himself has a vested interest in that region given that he comes from inflation-stricken Argentina.