Bitcoin News Today: Xapo's Expanded Bitcoin Fund Reflects Institutional Trust in Digital Collateral

Xapo Bank has expanded its Bitcoin credit fund following $100 million in member allocations during its initial phase, signaling growing institutional interest in Bitcoin-backed financial products. The Xapo Byzantine BTC Credit Fund, launched in 2024 through a partnership with Hilbert Group, employs a "fully institutional credit process" to lend deposited Bitcoin, generating yield for long-term holders while maintaining low-risk exposure. Tommy Doyle, global head of relationship management at Xapo Bank, emphasized that the fund complements the firm's broader suite of Bitcoin wealth products, offering "consistent yield" for clients with limited risk appetite according to the report.

The fund's structure involves Hilbert Capital's investment committee overseeing lending decisions, positioning it as a Bitcoin-native savings alternative. Xapo, primarily known as a crypto custodian, has previously offered Bitcoin-backed U.S. dollar loans of up to $1 million, but the credit fund marks a strategic shift toward institutional-grade yield generation. The expansion reflects broader market recovery in the Bitcoin lending sector, which faced a collapse in 2022 when platforms like BlockFi and Celsius defaulted. Newer players, including on-chain lenders like Aave and centralized entities such as Ledn, have since rebuilt confidence, with Xapo leveraging its regulatory compliance in Gibraltar and Cayman Islands to attract institutional capital.

The fund's success aligns with a broader trend of institutional adoption, including Texas's recent $5 million purchase of BlackRock's Bitcoin ETF and Abu Dhabi's approval of Ripple's RLUSD stablecoin for institutional use. However, Xapo's product stands out by directly deploying Bitcoin rather than relying on ETFs or stablecoins. The fund's terms restrict participation to eligible lenders based on individual circumstances, with minimum investment requirements and due diligence assessments ensuring alignment with its risk framework.

As Bitcoin's ecosystem evolves, Xapo's expansion underscores the maturation of Bitcoin as a collateral asset. The firm's regulatory oversight in Gibraltar and Cayman Islands, combined with Hilbert Group's institutional infrastructure, positions the fund to compete with traditional wealth management products. With Texas and other entities increasingly allocating to Bitcoin, Xapo's offering highlights the growing intersection of institutional finance and digital assets.