Xapo Bank said it has become the first UK bank to offer interest-bearing bitcoin and fiat accounts after securing a UK banking license through a passporting scheme operated by the Financial Conduct Authority (FCA), Prudential Regulation Authority (PRA), Bank of England, and Gibraltar authorities.
The bank’s platform offers 1% interest on bitcoin without the need to stake, lend, or lock up the assets, though details on the yield source were not disclosed. Users can spend bitcoin via Xapo’s debit card, send GBP payments to UK accounts, invest in S&P 500 stocks, acquire select cryptocurrencies, and access stablecoin payment rails with USD accounts.
Securing UK banking licenses has been challenging for fintech firms, but Xapo Bank, regulated by the Gibraltar Financial Services Commission since 2021, now meets the UK’s regulatory standards. This milestone allows Xapo to offer its services directly in the UK market.
Founded in 2013, Xapo Bank transitioned from a Bitcoin wallet to an e-money wallet and now operates as a “digital-first” retail bank and virtual asset service provider (VASP) custodian. It guarantees USD deposits up to €100,000 and uses multi-party computation (MPC) technology to enhance security.
In May, Xapo enabled bitcoin deposits via the Lightning Network in collaboration with Lightspark, co-founded by former PayPal President David Marcus.
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The UK has been working towards regulatory clarity for crypto firms, with the Treasury publishing proposals for future crypto regulation. Despite some firms exiting the market due to new FCA crypto advertising rules, the UK remains committed to becoming a global hub for cryptocurrency innovation.
The FCA banned the sale of derivatives and exchange-traded products to retail investors in 2021. However, crypto ETNs for professional investors were launched on the London Stock Exchange in May.
Xapo Bank’s CEO, Seamus Rocca, said, “We are eager to expand our membership in the UK, assisting valuable members in diversifying their wealth through bitcoin and secure banking.”
