RATE Group | Coinbase Diversifies Revenue With $55M Xapo Purchase
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Coinbase Diversifies Revenue With $55M Xapo Purchase

18 Aug Coinbase Diversifies Revenue With $55M Xapo Purchase

Posted at 11:14h in Cryptocurrency News by

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 Morning Markets: Coinbase bought part of a rival crypto-focused exchange. Why?

After media reports that the deal was underway, Coinbase announced yesterday that it purchased the custody business of rival exchange Xapo. Fortune reports that the deal cost $55 million.

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Why did Coinbase spend a chunk of capital to pick up the asset? We’ll need to understand what custody means in the universe of cryptocurrency, how lucrative it is or isn’t, and how Coinbase makes money otherwise. Let’s do it.

Custody

As the name implies, custody in the cryptocurrency world means taking control of and securing the crypto-assets of others. There are various ways to do this, with Xapo itself making waves for holding customer assets under a mountain.

In the cryptocurrency industry, hacks, thefts, and other security issues are rife. If you control a large chunk of a cryptocurrency, or indeed several different assets, you’re probably willing to pay…

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