Cryptocurrency firm Coinbase has acquired the custody business of Xapo, a service best known for storing Bitcoins in a vault under a Swiss mountain. The acquisition comes as part of an aggressive push by Coinbase to expand its custody services, and could result in the San Francisco company storing over 5% of all Bitcoins in circulation.
Coinbase paid $55 million for Xapo and, as a result of the deal, now has over $7 billion in crypto assets under management, according to a person familiar with the deal. The person, who was not authorized to speak for attribution, said the purchase came after Coinbase outbid investment giant Fidelity.
Xapo, which launched in 2013, will hold onto its exchange business, which lets ordinary consumers buy and sell Bitcoin. Its founder, Wences Casares, says he will stay on in his long-time role of CEO.
In an interview with Fortune, Casares said the retail exchange business has always been Xapo’s core focus, and that the custody business developed as a sideline at a time when wealthy Bitcoin investors…