Xapo Bank has introduced a new financial product allowing its UK customers to earn daily interest on their Bitcoin deposits.
The interest will be paid in Satoshis, the smallest unit of Bitcoin, with variable rates applicable to balances up to 5 BTC.
The bank’s new Bitcoin accounts reportedly offer 1% interest without requiring users to stake, lend, or lock up their cryptocurrency. Customers can also use Xapo’s debit card to spend their Bitcoin, send direct GBP payments to UK bank account banks in S&P 500 stocks, acquire select cryptocurrencies, and access stablecoin payment rails with USD bank accounts. However, Xapo has not disclosed how the interest yield is generated.
According to a new report from The Block, this new product offering comes after the Gibraltar-based digital payment provider’s expansion into the UK market. Although regulated by the Gibraltar Financial Services Commission in 2021, Xapo was not officially regulated in the UK until it passported its license to the UK via a scheme instituted by the Financial Conduct Authority (FCA), the Prudential Regulation Authority (PRA), the Bank of England, and Gibraltar authorities.
Xapo Bank, founded in 2013 as a Bitcoin wallet provider, has evolved into a digital-first bank and Virtual Asset Service Provider (VASP) custodian. Its move comes amid a surge in interest in digital asset services in the UK, where fintech companies, including crypto-friendly apps, are increasingly seeking operational licenses.
Notably, the UK Law Commission recently recommended legal reforms to classify crypto assets as a new category of personal property, aiming to clarify property rights related to digital assets. The Bank of England and the FCA have also launched a consultation on a pilot program, tagged “Digital Securities Sandbox”, to test distributed ledger technology in securities trading and settlement. This initiative could significantly influence the future regulatory landscape for digital finance in the UK.
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