Xapo Will Stop Its Services To US Customers Soon

One of the earliest Bitcoin custodial services Xapo has announced that it will be halting its services in the United States by March next year.

The custodial firm has been sending emails to its American-based client, telling them about the closure plans. Xapo has also asked the customers to withdraw their funds as soon as possible before the March deadline. Earlier, the firm stopped Bitcoin transactions on its wallet for US customers. Xapo informed the customers that its subsidiary Xapo Inc. will be leaving the U.S. market and all customer accounts will be closed.

“[…] Xapo, Inc. is leaving the U.S. market and will be closing all U.S. customer Xapo accounts,” the firm revealed in the email.

The custodial service provider also asked clients to transfer all their funds to an external Bitcoin address. The firm is also changing its business model from providing a custodial service to offering digital banking services.

Xapo targeting specific clients

Xapo founder and chief executive officer Wences Casares stated that the core value proposition of the firm is to provide top security for its client’s life saving, especially in the emerging markets.

He further stated that the firm is targeting clients who have above $30,000 in savings and less than $1 million who don’t wish to keep all their savings in their country or their local currency.

The amount of savings they have means they don’t have access to international private banking services. These groups of clients are what Xapo is looking for, he stated.

Xapo recently got a banking license in Gibraltar. However, the firm realized that to meet up with the U.S. banking regulations, it needs to establish a separate organization since the U.S. market doesn’t have a strong demand for its type of service.

The decision was taken for the growth of the firm

Casares said the decision to leave the U.S. market was taken because it was in the best interest of the company. According to him, staying in the U.S. market needs a lot of time investment, and efforts, as well as a separate entity within Xapo. Even with those efforts, the end product would still be worse than what is currently offered internationally. As a result, the growth of the company will be better achieved without the company’s services in the U.S, he reiterated.

Xapo has its headquarters in Switzerland and was among the original members of the Facebook-led Libra Association, now known as Diem Association. The company is still a member, even when many top supporting companies have left.

Last year, Xapo made a major decision by selling its institutional business to Coinbase for $55 million. But everything is not so rosy for the firm. It’s currently in the midst of a lawsuit in the U.S. for allowing some of its clients to store stolen Bitcoin.