Xapo has revealed its plans to discontinue its services from March 1, 2021. Xapo customers in the US got this new development via email that was sent on Wednesday. The platform, being on the first Bitcoin custodians, will no longer give American residents its services.
The company explained that the change in its business strategies necessitated its exit from the US market. Equally, Xapo reported that accounts within the region would be shut down, and it urges customers to transfer their assets to other Bitcoin addresses to prevent loss of valuables. Customers did not expect such an email since the company has had a successful time in the American market.
Xapo to change services
The platform will no longer perform its custodian functions since it hopes to transform into a digital banking service. The company explained that its primary mission is to protect its customer’s savings in a safe and secured environment.
It gave a range of its average customer’s savings, noting that it’s usually $30,000 and above but lesser than a million. The firm’s revealed that its target market doesn’t want to use the traditional banking system or currency. Due to the low lifesaving they possess, they cannot afford a private banking service.
Xapo stated that the American market is hard to work with since its acquisition of a Gibraltar banking license was noticed based on the country’s strict regulations. It also needs another institution to comply with its rules, especially since Americans do not actively demand their service set.
It admitted that giving services to the region will consume many time, efforts, and fundings. According to the firm, it needs a separate body to help Xapo deliver successfully in the market. The company showed that it was not ready to give that investment.
Xapo stops purchase and sales within the platform
In compliance with its email, the firm is taking steps to fully wipe out its services from America. Customers in the country can no longer purchase or sell their Bitcoin holdings within the custodian app. Many exchanges in the cryptocurrency industry complain of the stringent regulations US regulatory bodies put up for foreign businesses, making their survival difficult in the region.
Similarly, Huobi recently gained a license to trade in the US after its exit last year because of the federal laws. Its recent partnership with a firm based in America helped it acquire its new permit. Xapo also partnered with the controversial Facebook team, Libra, in its bid to launch its digital currency. FinCEN, the United States federal agency, is also proposing stricter laws for the cryptocurrency industry, different from its earlier regulation.
The body explained that the self-hosted wallets help criminals launder money without detection, which is a criminal offense in the state. The region is also notorious for being home to numerous ransomware hackers who demand ransom in payment, necessitating the agency’s move to remove anonymity from the platform. It’s also not the first time a successful business will exit the country due to its failure to meet specific regulations.
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