Xapo Bank and Capula Management Signal Strong Institutional Interest in Bitcoin
By: Eliza Bennet
Xapo Bank Expands to UK, Offering 1% Yield on Bitcoin Accounts
Xapo Bank, a Bitcoin-centric financial institution, has announced its entry into the United Kingdom market, marking a pioneering move as the first licensed bank in the UK to offer combined interest-bearing accounts for both fiat and Bitcoin. According to an August 5 statement, Xapo successfully transferred its banking license to the UK as part of the 'passporting' scheme supervised by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA). This framework permits firms from Gibraltar to extend operations into the UK.
Seamus Rocca, CEO of Xapo Bank, explained, "We have successfully passported our banking license into the UK. This means we are allowed to offer our banking services directly to the UK market. Achieving this is no easy feat and shows we meet the UK’s high regulatory standards."
New Services and Offerings
Xapo's new offering allows customers to transfer up to £1 million (approximately $1.275 million) to UK wallets and bank accounts. The institution will provide a 1% yield on Bitcoin holdings without the necessity of staking or asset locking. In addition, account holders can utilize a widely accepted debit card to spend their digital assets and access other financial services, including investments in S&P 500 stocks or buying select cryptocurrencies. The bank has also integrated stablecoin payment options into its USD accounts.
UK’s Regulatory Landscape
Xapo's successful entry into the UK market follows a similar move by Revolut, which also recently secured a banking license from UK regulators. Despite recent challenges for fintech companies trying to obtain UK licenses, the regulatory landscape appears to be becoming more crypto-friendly. The FCA reported that 10% of UK adults held cryptocurrencies in 2023.
Joey Garcia, Director and Head of Regulatory and Public Affairs at Xapo Bank, remarked, "The UK is swiftly emerging as a global hub for cryptocurrency innovation, boasting a promising regulatory framework, a dynamic financial ecosystem, and a talent-rich environment."
Capula Management Reveals $464 Million Investment in Spot Bitcoin ETFs
Capula Management, Europe’s fourth-largest hedge fund, disclosed that it purchased over $464 million in spot Bitcoin exchange-traded funds (ETFs) during the second quarter of 2024. According to a US Securities and Exchange Commission 13F filing released on August 5, Capula holds 4,022,346 shares in the Fidelity Wise Origin Bitcoin ETF valued at around $211 million, and 7,419,208 shares in BlackRock’s iShares Bitcoin fund, amounting to $253 million.
13F filings are quarterly reports that institutional investment managers with at least $100 million in equity assets are required to submit to the SEC. These reports disclose their long positions in US equities and options on equities but do not reveal short positions.
Rising Institutional Interest in Bitcoin ETFs
Capula’s substantial investment highlights a broader trend of increasing institutional interest in spot Bitcoin ETFs. Last month, the State of Michigan Retirement System revealed a $6.6 million stake in the ARK 21Shares Bitcoin ETF in its 13F filing.
Institutional interest remains strong despite Bitcoin's significant drop to a six-month low of under $50,000 before recovering to over $54,000. According to Eric Balchunas, Bloomberg's ETF analyst, the trading volumes for these investment products show robust community engagement, with around $2.5 billion traded during the market's opening hours.
“If you [are a] Bitcoin bull, you actually DONT [sic] want to see crazy volume today as ETF volume on bad days is a pretty reliable measure of fear. On flip, deep liquidity on bad days is part of what traders and institutions love about ETFs, so you also want to see volume too, good for the long term,” said Balchunas.
