Where it came from
Xapo's own company pages date the business to 2013 and name Wences Casares as its founder. What it sold first was storage. On 14 June 2018 the New York State Department of Financial Services granted a virtual currency licence to Xapo, Inc. for "a digital wallet and a vault service, which is intended as a safe and insured method to store Bitcoins".
The bank is a different company. The GFSC register records Xapo Bank Limited as incorporated in Gibraltar on 8 August 2014, company number 111928, and lists its previous names as Xapo (Gibraltar) Limited and then Xapo Bank (Gibraltar) Limited. Xapo announced in August 2017 that it had been granted an e-money licence effective 10 July 2017, number FSC0063BNK, under the Financial Services (Banking) Act 1992. Its timeline says the bank was "officially born" in 2021.
The sale to Coinbase
On 15 August 2019 Xapo published a post headed "Xapo sells Institutional Custody Business to Coinbase, giving focus to Consumer Business", opening: "Today, we are announcing the sale of our Institutional Custody Business to Coinbase." Coinbase said the same day that Coinbase Custody "has completed an acquisition of Xapo's institutional businesses". Neither party stated a price.
Xapo gave its reasons in that post: it charged institutional clients nothing to hold and service their coins, insurance and minimum capital were getting expensive, and it did not think it fair to charge without adding features. It kept the consumer side.
What it is now
Xapo Bank Limited is regulated by the Gibraltar Financial Services Commission under the Financial Services Act 2019 as a credit institution, Permission No. 23171. The register gives the permitted activity as "Accepting Deposits (Banking)", and under the Banking Directive "Acceptance of deposits and other repayable funds from the public", with services provided into the United Kingdom.
In plain terms it runs accounts holding US dollars and bitcoin side by side, pays interest on both, lends dollars against a member's bitcoin, and offers custody and inheritance arrangements. The bank does not hold the bitcoin: Xapo VASP Limited, company number 118088, holds it under a separate DLT Provider permission, No. 26061, and lending is by Xapo Credit Limited, company number 124075. The company states that fiat deposits are covered by the Gibraltar Deposit Guarantee Scheme up to GBP 120,000 equivalent and that crypto deposits are not. Listing here is not endorsement.