The co-founder and current CEO of the US-based Coinbase, Brian Armstrong has said that despite it not being clear a year ago on whether we would ever see institutional adoption of crypto, the clarity is here now.
Armstrong put on Twitter today:
“Whether institutions were going to adopt crypto or not was an open question about 12 months ago. I think it’s safe to say we now know the answer. We’re seeing $200-400M a week in new crypto deposits come in from institutional customers.”
The CEO’s words come just an hour after Coinbase Custody announced that it has completed its purchase of the institutional custody business of Xapo, which results in it “becoming the world’s largest crypto custodian.”
The US Exchange said in a blog post that since Custody was launched last year, it has been able to grow to “over $7 billion in Assets Under Custody (AUC) stored on behalf of more than 120 clients in 14 different countries, making it the largest, most globally recognized and most trusted institutional custodian in the world.”
A new report from Fortune suggests that Coinbase paid over $50 million for Xapo’s institutional arm and that Xapo will also “hold onto its exchange business, which lets ordinary consumers buy and sell Bitcoin.”
The founder and CEO of Xapo, Wences Casares, has said:
“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.”
Xapo’s blog post about the sale of its institutional custody business further explains how Xapo ended up in such a conundrum.
“Today, we don’t charge our clients anything to hold their coins in custody and service them. It is getting expensive to support this business, especially the insurance and minimum capital requirement. However, without providing additional features and service, we felt it wouldn’t be fair to start charging our clients a fee.”
On top of this, it explains why the firm was sold to Coinbase Custody:
“We believe that in choosing Coinbase, the Institutional Custody Business is going to a company that can provide great insurance, borrowing and investment alternatives that we are not offering. Coinbase has top notch security and they are fully insured. They are a qualified custodian and a NY Limited Purpose Trust Company. They are a fiduciary under NY Banking Law and all assets are held in trust for the benefit of their clients. Additionally, they have a pipeline to offer wide financial services for large holders.”