Bitcoin’s wealthy holders turning to loans and yield as investment habits mature: Xapo CEO

Wealthy bitcoin holders are increasingly using the cryptocurrency as an asset to generate income and accumulate more, according to Xapo Bank CEO Seamus Rocca. At the Gibraltar-based bank, customers are seeking financial services that allow them to retain their bitcoin holdings while earning interest or gaining exposure through lending.

Rocca noted that this trend reflects the growing maturity of bitcoin as an investment. Five or six years ago, the cryptocurrency was primarily viewed as a speculative trading asset. Today, more holders want financial services tailored to their existing wealth. Xapo, which originated from a bitcoin custody business offering Swiss bunker storage, caters to early adopters who have experienced multiple halvings and market cycles.

Customers can choose to receive interest in bitcoin or dollar savings, gradually rebuilding their cryptocurrency holdings while retaining cash. About 45% of Xapo's customers utilize this feature. The demand for yield and income generation is driving the shift, with some customers becoming more willing to take profits as bitcoin reaches new highs, while others prefer holding and borrowing against their coins.

Traditional banks are acknowledging the need for bitcoin exposure and are developing investment products to meet customer demand, albeit cautiously. Xapo Bank's approach allows clients to retain exposure to future gains while avoiding the risks associated with credit and counterparty risk. As more institutions allocate resources to bitcoin, Rocca expects the cryptocurrency's next phase of growth to depend on long-term allocations and the reduction of geopolitical and regulatory uncertainty.