Crypto custody solution provider BitGo says that it is being approached by some clients of rival custodian Xapo who are “concerned about the safety of their digital assets.”

As The Block’s Larry Sermak reported on May 16, back then, Coinbase was “in advanced talks to buy custody provider Xapo for ~$50 million plus an earn-out in order to boost its custody business.”

Then, Coinbase Custody announced on August 2 that it had been chosen by Grayscale Investments, LLC (“Grayscale”) to be the custodian for the (roughly) $7.2 billion worth of digital assets managed by the latter.

New York-based cryptoasset investment firm Grayscale Investments is a subsidiary of Barry Silbert’s incubator and venture capital firm Digital Currency Group (DCG). According to Grayscale’s Digital Asset Investment Report for Q2 2019, it’s total assets under management (AUM) is $2.7 billion.

Coinbase Custody, which was launched in 2018, is “offers clients access to the secure, institutional-grade offline storage solution that has been used by Coinbase’s exchange business since 2012. “

It is “an independent, NYDFS-regulated entity built on Coinbase’s crypto-first DNA, offering the most sophisticated and reliable custody solution in the world.” It is “regulated by the New York Department of Financial Services (NYDFS), and operate as an independently capitalized entity, Coinbase Trust Company.”

Coinbase’s blog post said that it would be “serving as custodian for the underlying assets in Grayscale’s family of products, which include Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH), Ethereum Classic (ETC), Litecoin (LTC), Stellar Lumens (XLM), XRP and Zcash (ZEC).”

Coindesk’s report on that day said that “most of the assets are being transferred to Coinbase Custody from Grayscale’s existing security provider, Xapo.”

In a blog post published earlier today, BitGo says that’s when their phones “started ringing with clients looking for alternatives.”

BitGo acknowledges that rival crypto custodian Xapo “built a great business because they were a serious custodian that understood their responsibilities to their clients.” (Note the use of “were” as opposed to “are”.)

It goes on to say that the Xapo clients calling them are doing so because they are “concerned about the safety of their digital assets.”

To help these people, BitGo says that until the end of next month, it is offering “qualified clients” a zero-fee custody service “for the next year.”

BitGo’s service, which is mainly for institutions and high-net-worth individuals, features:

  • a dedicated account manager;
  • regulatory compliance since BitGo Trust Company is a qualified custodian (its trust charter is from the Division of Banking of the South Dakota Department of Labor and Regulation);
  • up to $100 million insurance cover on cryptoassets under custody;
  • state-of-the-art security;
  • Institutional-grade policy controls (such as multiple approvals); and
  • fast on-boarding of new clients; and
  • 24/7 support

Featured Image Courtesy of BitGo.

The announcement in BitGo’s blog post was first covered by The Block’s Yogita Khatri.