Coinbase and Xapo Conclude $55 Million Custody DealAuthor: Ali RazaLast Updated: 17 June 2020 Coinbase has announced the acquisition of the institutional business of Xapo, a custody service, and cryptocurrency wallet provider.According to the exchange, the deal will see the total value of assets under their custody increase to over $7 billion. Coinbase’s custody business is continuously growing, and the exchange is becoming one of the industry leaders in that regard.Reports on the deal state that Coinbase forked out $55 million to acquire Xapo’s institutional business. The exchange beat other competitors such as Fidelity to make the acquisition.This also shows how attractive Xapo’s institutional business is and how top firms think that it will be a lucrative business for them.Xapo was established in 2013, and it is popular for the security it gives crypto-asset holders who use the firm’s wallets.The company has physical vaults based in Switzerland in which crypto holders can store keys to their crypto assets. Storing keys offline is one of the most secure ways of ensuring the safety of one’s crypto holdings, and Xapo provides this service among others.As this deal is being sealed, several of Xapo’s clients have already started moving their crypto assets to Coinbase.The exchange is expected to receive over 514,000 Bitcoin from Xapo’s clients, which is over $5.2 billion worth of the leading cryptocurrency according to current market rates.Coinbase diversifying and expandingAccording to Sam McIngvale, CEO of Coinbase Custody, the firm is considering venturing into crypto lending in the future. The business would be designed to grant investors higher returns on their crypto-assets.A crypto holder could lend the digital assets in their holding and earn interest on those assets. Such services would make Coinbase one of the top digital cryptocurrency exchanges in the world.Coinbase Custody’s growth this year has been phenomenal. In May at the exchange’s Consensus 2019 event, Brian Armstrong, CEO of Coinbase, said that their custody branch of business had just over $1 billion worth of assets under their management. These assets were from about 70 institutions.Fast forward a few months later, the custody is now managing assets worth over $6 billion. If all of Xapo’s clients can be convinced to move their Bitcoin holdings to Coinbase Custody, the firm will have over $8 billion worth of crypto assets in its custody.This growth is a reflection of the trust institutions have in Coinbase Custody and the ambition of the firm itself.The confidence institutional businesses have in Coinbase Custody was captured in a statement by Wences Casares, CEO, and founder of Xapo, who said that they are confident that their institutional business is going to a company which provides excellent investment alternatives, insurance, and borrowing.He added that they believe that Coinbase will utilize the chance to prove to Xapo’s clients that they deserve their business.