Xapo Bank is now owned by Coinbase Announce On March 2, it integrated the Bitcoin Lightning Network and became the first fully licensed bank to integrate the Lightning Network.
The integration move comes amid operational troubles at two leading cryptocurrency banks, Silvergate and Signature. Considering the current state of the crypto banking industry, Xapo’s decision to integrate can be seen as a testament to the bank’s optimism about the industry.
Xapo integrates Lightning Network
Xapo was founded in 2013 as a wallet and cold storage. In 2021, they became the first BTC holding company to receive a banking license, thus becoming a bank. Coinbase Custody, the custody arm of the Coinbase exchange, acquired Xapo in 2019. At the time, Xapo deposited about $7 billion, making Coinbase Custody the world’s largest cryptocurrency custody firm.
To kick off the integration, Xapo partnered with Lightspark, a company that provides infrastructure services for companies looking to integrate with the Lightning Network.
The integration allows Xapo Bank users to pay in BTC for purchases of up to $100 at any merchant that accepts Lightning Network payments. Considering the significant improvements brought about by the Lightning Network in terms of speed and low cost, Xapo is proud to be the first fully licensed bank to offer near instant BTC payments.
Commenting on the integration, Xapo Bank CEO Seamus Rocca said:
“The average transaction confirmation time of 1 hour combined with high fees during peak usage times makes the Bitcoin network unsuitable for everyday small payments, such as groceries.
By integrating with the super-efficient Lightning Network, we are the first bank in the world to simplify this process and help our members pay for retail transactions with Bitcoin without conversion. Dollars first”.
The Chaos of Crypto Banking
Silvergate and Signature Bank have been struggling since the FTX crash and it looks like things are getting worse for them.
On March 8, Silvergate Bank announced that it would suspend banking business as required. Silvergate’s crisis became apparent on March 1, when the bank said it would delay filing its annual 10-K by two weeks. Silvergate shares responded, falling 32% in the next few hours.
While announcing the delay in its 10-K report, the bank also said it was facing regulatory questions about its relationship with failed exchange FTX. Several companies working with Silvergate severed ties with the bank after learning of the news. Although Silvergate has a joint recovery plan with the FDIC, it has decided to suspend operations.
Signature Bank’s problems began in September 2022, a few months after the FTX crash. Signature’s interim third-quarter report revealed that the bank lost $4.27 billion in cash outflows “due to the recent crypto winter.”
In December, the bank decided to change its outlook and announced that it would shrink its cryptocurrency-related deposits from $8 to $10 billion. Through it, the bank claims it is “more than a cryptocurrency bank” and wants “clear transparency.” In January, Signature announced another update to crypto trading and introduced a minimum transaction limit of $100,000.
While Signature was keen to turn its outlook into “more than just a cryptocurrency bank”, it continued to provide services during Silvergate’s collapse and provided services to many related companies.
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According to Cryptoslate