Xapo Bank expands bitcoin credit fund as it develops ‘suite of BTC wealth products’

Xapo Bank is opening its yield-bearing Bitcoin lending product to a wider audience. The Xapo BTC Credit Fund reportedly attracted $100 million in member allocations during its initial phase, the company said.

According to a statement on Wednesday, the Xapo Byzantine BTC Credit Fund first launched in 2024 through a strategic partnership with Hilbert Group, which acts as an independent investment manager for the product. 

The fund deploys deposited Bitcoin through a "fully institutional credit process" with lending decisions overseen by Hilbert Capital's investment committee. This setup positions the product as a "Bitcoin-native" savings alternative that earns interest on loans to counterparties.

"The Xapo BTC Credit Fund fits nicely into our suite of BTC wealth products in delivering consistent yield, with a limited low risk appetite, for our long-term BTC holders," Tommy Doyle, global head of relationship management at Xapo Bank, said in a statement.

Earlier this year, Xapo, known primarily as a crypto custodian, began offering bitcoin-backed U.S. dollar loans of up to $1 million. Xapo was also the first bank to enable interest-bearing bitcoin and fiat accounts in the UK.

Give crypto credit?

Bitcoin's credit ecosystem is continuing to rebound following the collapse of the crypto lending ecosystem in 2022, which saw major providers like BlockFi, Celsius, and Voyager Digital go bankrupt.

Newer products like Coinbase Borrow, which enable users to borrow USDC against their bitcoins, and the continuing operation of onchain lenders like Aave and centralized Bitcoin-focused lenders like Ledn, which survived the market downturn, are reinstilling a certain amount of confidence in the sector.

It's not uncommon for major token holders to borrow against their digital assets, like MetaPlanet, which has a $500 million credit facility that it borrows against to purchase bitcoin, using bitcoin as collateral.

Founded in 2013, Xapo Bank Limited is overseen as a credit institution by the Gibraltar Financial Services Commission, while the Xapo BTC Credit Fund is incorporated as an exempted company with limited liability in the Cayman Islands and regulated as a mutual fund.

"Exposures are continuously monitored throughout the lending lifecycle to ensure they remain within the fund’s defined risk framework," Xapo said.

According to the terms and conditions of the Xapo BTC Credit Fund, the fund is restricted to eligible lenders "based on a person's specific situation," and may include minimum investment requirements and due diligence assessments.