Xapo is leaving the U.S. market. The BTC wallet and custodian reportedly sent an email to its U.S. users, informing them that a change in its global business strategy has forced it to end its services in the country, effective March 1, 2021.
The email requested all U.S. users to transfer their BTC holdings from Xapo to external BTC addresses before the deadline date. Part of the email stated:
“Due to a change in our global business strategy, Xapo, Inc. is leaving the U.S. market and will be closing all U.S. customer Xapo accounts. As a result, we’ll need you to transfer your funds to an external Bitcoin address.”
The exit comes barely two months after the company exited the Venezuelan market. Announcing the exit in an email, Xapo told its Venezuelan clients that incoming regulations for digital banking providers had forced it to shut down. The firm gave its users until the end of the year to withdraw their BTC holdings.
Xapo founder Wences Cesares was quoted by CoinDesk saying the firm has realized it will have to set up “a separate organization to comply with U.S. banking regulations.”
Cesares stated, “Serving the US market would require quite a lot of effort, time and investment, it would require a separate organization within Xapo to support it and it would still yield a worse product than what we can offer internationally.”
Cesares also cited the low demand for its products in the U.S. as yet another factor leading to its decision to exit. Xapo has been targeting emerging markets, promising its clients to protect their life savings. The company primarily targets users with over $30,000 in savings, but under $1 million, who want to hedge their money against their local currency or economy. This group is unable to access international private banking services, with Xapo being the closest thing they have to that.
The U.S. exit also comes just over a year since Xapo sold its custodial business to U.S. digital currency exchange Coinbase. The exchange, which is under fire for offering an illegal security in XRP, paid $55 million for the business in August 2019. Sources with knowledge of the matter said at the time that Coinbase had outbid Wall Street giant Fidelity for the business.