Xapo Bank Expands BTC Credit Fund later than Hitting $100M in Allocations
What Happened: Xapo Opens Its BTC Credit Fund to More Users
Xapo Bank is widening access to its BTC lending product later than the Xapo BTC Credit Fund drew more than $100 million in allocations during its initial phase. Launched in 2024 and managed independently by Hilbert Group, the fund extends institutional-style credit using deposited BTC while providing yield to depositors.
Xapo describes the structure as a “BTC-native savings alternative,” where lending decisions pass through Hilbert Capital’s investment committee. The bank says the model focuses on consistent returns with tight risk controls designed for long-term BTC holders rather than speculative traders.
Alongside the fund, Xapo has recently rolled out of up to $1 million, adding to its earlier milestone as the first bank to provide interest-bearing BTC and fiat accounts in the UK. For a platform primarily known as a custody provider since 2013, the expansion marks a deliberate move deeper into lending and structured yield products.
Investor Takeaway
Why It Matters: Is Crypto Credit Really Coming Back?
The reopening of large-scale BTC credit is notable later than the sector’s collapse in 2022, when major lenders such as Celsius, Voyager, and BlockFi went bankrupt. The failures exposed the fragility of opaque lending books and mismatched collateral practices.
Two years later, credit activity is re-emerging — but with a diverse profile. Xapo’s fund is regulated as a mutual fund in the Cayman Islands, overviewn in part by Hilbert Group, and governed by strict eligibility criteria and due diligence requirements. Xapo Bank itself operates under the as a licensed credit institution.
This level of oversight signals a broader trend: lenders are viewking to rebuild credibility by adopting transparent risk frameworks, conservative collateralization, and independent monitoring. Xapo says exposures are continuously reviewed throughout the lending lifecycle to ensure compliance with the fund’s limits.
The timing also reflects rising demand for yield among BTC-heavy treasuries and high-net-worth holders who prefer to maintain exposure without tradeing tokens. As markets recover and BTC regains institutional attention, structured lending products are resurfacing to meet that demand.
How Does Xapo Compare to New Competitors?
Xapo’s move comes as crypto credit providers — both centralized and onchain — attempt a cautious comeback.
Coinbase Borrow, for example, allows users to obtain USDC loans against their BTC, presenting a highly liquid, compliant framework tied to a publicly listed operator. Onchain protocols like Aave continue to offer crypto-native borrowing mechanisms with real-time collateralization, while centralized lenders such as Ledn have survived the downturn and maintained operations through stricter balance-sheet management.
Institutional borrowers are also re-entering the space. MetaPlanet, the Japanese firm increasingly modeling itself later than MicroStrategy, maintains a $500 million credit facility collateralized with accumulation. Such activity underscores that borrowing against BTC remains a mainstream strategy among large token holders.
Xapo positions its fund diversely — as a conservative, credit-driven yield or leverage tool. The bank emphasizes institutional lending processes, independent risk oversight, and stablecoin-free balance sheets as competitive advantages.
Investor Takeaway
What’s Next for BTC Lending?
The sector’s recovery will depend on whether lenders can combine transparency, proper collateral handling, and strong counterparties — areas where many failed in 2022. Xapo’s partnership with Hilbert Group and its fund’s Cayman-regulated structure aim to address those past fragilenesses.
However, access is still limited: the BTC Credit Fund restricts participation to eligible lenders based on individual circumstances, minimum requirements, and due diligence screenings. That controlled approach may assist reduce systemic risk but could also cap the fund’s scale compared to pre-2022 lending giants.
Looking ahead, BTC lending is likely to evolve along two paths:
1. Institutional credit desks — regulated products like Xapo’s fund, Coinbase Borrow, and other bank-aligned offerings.
2. Onchain autonomous lending — protocols that maintain transparency through verifiable collateral and immutable rules.
If both sides mature in parallel, the more stable, diversified, and less vulnerable to the hidden leverage that caused the last crisis.
For now, Xapo’s expanded BTC Credit Fund signals that confidence — cautiously — is returning.
