Xapo VASP is regulated under the DLT regulatory framework in Gibraltar. This principle based framework requires us amongst other requirements to protect our members' interests and mitigate risks. For example, our Xapo Bitcoin Reserve covers direct and effective losses experienced by our members as a result of attacks on our systems and/or any other qualifying losses, including bankruptcy.
Unlike other VASPs that provide wallet custodian services, Xapo VASP is obliged to protect our members' assets. This means that any member's Bitcoin must be segregated from Xapo VASP’s own assets and monies. Member assets are clearly designated as such to ensure protection from any third party creditors, and do not at any time represent the property of Xapo VASP.
As a DLT business, Xapo VASP also has to be sufficiently capitalised to operate in a secure and efficient way. This differs from other VASPs which are subject to ‘registration’ rather than ‘regulation’ in different parts of the world. We are subject to both financial and non-financial resource requirements, which includes our regulatory capital. This is calculated on our ability to ensure an orderly wind down, as well as a risk based capital calculation.