Wealthy bitcoin holders are borrowing and earning rather than selling, says Xapo Bank CEO
Wealthy bitcoin holders increasingly view their cryptocurrency as an asset to borrow against and generate income from, marking a transition from speculation towards private banking, according to Seamus Rocca, chief executive of Xapo Bank.
Rocca, who leads the Gibraltar-based bank, told CoinDesk that his clients want liquidity without selling their bitcoin, place part of their holdings into income-generating investments, or accumulate more BTC through interest paid on their dollar savings. “Clients are looking for yield and alpha,” he said, pointing to demand from funds and family offices for accumulation and income products.
The behaviour, he argued, reflects bitcoin’s growing maturity. Five or six years ago the cryptocurrency was largely seen as a trading and speculative asset. Today, more holders want financial services built around their existing wealth.
Xapo emerged from a bitcoin custody business known for its storage in a Swiss bunker. Its clients include early adopters who have lived through several halvings, the periodic reductions in new bitcoin issuance, and the bull and bear markets that surround them. The bank charges annual membership fees of $1,000, combining dollar banking services with access to bitcoin custody, investment and borrowing. For readers tracking how large holders move their coins, our Bitcoin coverage follows the trend in detail.
Two camps of bitcoin wealth
Experience has pushed these clients in different directions. Some early adopters have become more willing to take profits as bitcoin reached record prices, having watched gains evaporate in previous downturns, Rocca said. Others, notably investors who entered around 2018 and 2019, remain committed to holding their assets and prefer to borrow using their coins as collateral when they need liquidity.
For the profit-takers, selling does not necessarily mean abandoning bitcoin. Some keep proceeds in dollar savings accounts and receive interest paid in BTC, gradually rebuilding their cryptocurrency holdings while holding cash. Rocca said roughly 45% of Xapo clients use this feature.
The bank currently advertises a variable base rate of 4.1% on dollar savings, paid in bitcoin, alongside a temporary introductory rate of 4.6% for eligible new members. Separately, there is a bitcoin credit fund targeting annual returns of up to 4% through lending, which exposes investors to credit and counterparty risk.
The common denominator is demand to make existing wealth productive. “The theme of this cycle is yield, accumulation, income generation,” Rocca said. Borrowing allows clients to keep exposure to future bitcoin gains, though they remain exposed to price falls while carrying debt, a risk that cuts both ways in volatile markets.
Banks see the demand but move slowly
Traditional banks increasingly recognise that their clients want bitcoin exposure, Rocca said. Their interest in custody and investment products represents a substantial shift from the scepticism he encountered when he began working in cryptocurrency in 2016.
But building out a broader offering takes time. “Big banks are slow,” he said, describing institutions where new products require committee approval and staff hesitate to back activities perceived as risky.
Political and regulatory uncertainty reinforces that caution. Banks that previously feared repercussions from serving crypto companies need certainty that a more favourable environment will persist before committing resources, he said. For now, some institutions do just enough to meet client demand through investment products, while refraining from offering services that would let clients borrow against or directly manage their bitcoin wealth.
“Their slowness is a good opportunity for companies like Xapo Bank,” Rocca said. He also sees merit in a measured approach, arguing that another failure involving poorly managed crypto companies could damage confidence in bitcoin itself. A single high-profile collapse tends to set back institutional adoption across the sector, which is why cautious product design matters as much as speed to market.
What it means for the market
The shift Rocca describes has several implications for the wider crypto market. First, it suggests that a meaningful cohort of long-term holders, particularly those who bought around 2018 and 2019, has no intention of selling into strength. If those holders increasingly meet liquidity needs through collateralised borrowing instead of outright sales, the effective supply of bitcoin on exchanges could stay tighter than trading volumes alone would suggest. That dynamic matters in a market where price is set at the margin and a relatively small amount of available coin can move the tape.
Second, the growth of yield products paid in BTC, such as Xapo’s dollar savings interest paid in bitcoin, creates a slow but persistent accumulation channel. When 45% of a bank’s client base is converting dollar interest into BTC each month, the aggregate effect across specialised providers becomes a structural source of demand that did not exist in earlier cycles.
Third, the opening left by slow-moving traditional banks is an invitation for specialised providers. If incumbents limit themselves to investment products and decline to offer borrowing or direct bitcoin wealth management, firms with custody heritage and banking licences will capture the deposits and lending margins. That competitive gap will not last indefinitely, though. Rocca’s own comments about banks needing certainty suggest that once regulators settle, the big players could move quickly, squeezing the window now enjoyed by niche banks.
The road ahead
Rocca’s portrait of the modern wealthy bitcoin holder, one who borrows rather than sells, earns rather than trades, and rebuilds BTC holdings through dollar interest, signals how far the market has moved from its casino years. The theme of this cycle, as he put it, is yield, accumulation and income generation. The credit fund targeting up to 4% returns adds genuine risk to the picture, and investors should weigh counterparty exposure carefully, as past lending failures in crypto have shown.
For the market, the key questions are whether bank-grade yield products can scale without repeating past blow-ups, and whether traditional banks will close the gap before specialists lock in the private banking relationship with bitcoin’s wealthiest holders. Rocca is betting they will not move fast enough. The next few quarters of price action and regulatory clarity will tell us whether that bet pays off.
