Xapo CEO: rich bitcoin holders now want loans and yield

Wealthy bitcoin owners are increasingly treating their coins like private-banking assets — something to borrow against and earn income on — rather than something to trade, according to Seamus Rocca, chief executive of Gibraltar-based Xapo Bank, who spoke to CoinDesk. "The theme of this cycle is yield, accumulation, income generation," he said.

What Xapo's clients are doing

• Borrowing instead of selling: many customers want cash without giving up their BTC, so they take loans with bitcoin as collateral.
• Selling, then rebuilding: some profit-takers keep the proceeds in dollar savings and receive the interest in bitcoin. Rocca said about 45% of Xapo customers use that feature.
• Income products: funds and family offices are asking for accumulation and income strategies. "Customers are looking for yield and alpha," Rocca said.

Xapo currently advertises a variable 4.1% base rate on dollar savings, paid in bitcoin, plus a temporary 4.6% introductory rate for eligible new members. A separate bitcoin credit fund targets returns of up to 4% a year through lending, which exposes investors to credit and counterparty risk. Membership costs $1,000 a year.

Two camps of early holders

Xapo began as a custody business known for storing coins in a Swiss bunker, and many of its clients have lived through several halvings. According to Rocca, that experience split them. Some of the earliest adopters became more willing to take profits near record prices after watching gains evaporate in past downturns. Others, including many who bought in 2018–2019, refuse to sell and borrow when they need liquidity.

Borrowing keeps the upside, but it also keeps the downside: a loan backed by bitcoin still has to be repaid in dollars if the price falls, and collateral can be sold if it drops far enough — the same mechanics behind today's $404 million of long liquidations.

Banks are interested, but slow

Rocca said traditional banks now accept that clients want bitcoin exposure, a big change from the scepticism he met in 2016. But "big banks are slow," he said, pointing to committee approvals and political and regulatory uncertainty. Many offer investment products such as ETFs without letting clients borrow against or directly manage bitcoin — a gap he called "a good opportunity" for specialists.

He also argued that ETF inflows have partly reflected arbitrage trades rather than long-term allocations: "People called the institutional cycle too early." In his view, less geopolitical and regulatory uncertainty could unlock corporate allocations and push bitcoin to $250,000 within two to three years — a forecast, not a certainty, and one his own clients disagree on: some are buying, others are sitting in dollars expecting further declines.

New to the trade-offs between owning coins and owning a fund? See bitcoin ETF vs buying bitcoin and our guide to custodial vs non-custodial wallets.