Coinbase Inc. is in advanced talks to acquire old-school bitcoin custody provider Xapo Inc., according to an unconfirmed published Thursday.

The Block, quoting unnamed sources, claimed that Coinbase has been locked in a “neck-and-neck race” with Fidelity Digital Assets to acquire Zapo over the past few weeks.

Founded in 2012, Xapo was one of the first companies both to provide bitcoin custody services and to raise significant venture capital in the space. In that time it has raised $40 million, the last round being in 2014. Investors include Emergence, Blockchain Capital, AME Cloud Ventures, Winklevoss Capital, Endeavor Catalyst, Greylock Partners, Index Ventures and Digital Currency Group.

As of 2019, Xapo is said to have nearly $5.5 billion in assets or nearly 700,000 bitcoin under custody. The acquisition price is rumored to be $50 million plus a contingent earn-out.

It’s not clear if Xapo had tried to shop itself or the acquisition interest is unsolicited, but the involvement of Fidelity is notable. Fidelity, through its wholly owned division Fidelity Digital Assets, only entered the cryptocurrency business in October with the launch of a digital asset custody and trading service for institutional investors. On May 6 it was reported that the company was weeks away from launching a bitcoin trading service as well.

Coinbase already has an existing custodial service, Coinbase Custody, that launched in August with a pitch to institutional investors as well. A custodian in finance is a third-party financial institution that holds customers’ securities for safekeeping to minimize the risk of their theft or loss.

Xapo, for either company, would be an immediate boost in widening their custodial services. Notably, Xapo does not charge for storing customer funds but instead generates revenue by enabling over-the-counter trades for customers using the bitcoin under custody.

Coinbase has been particularly busy of late, raising $300 million on a $8 billion valuation in October as well as buying blockchain tracking startup Neutrino srl in February. According to Crunchbase, Coinbase has made 10 acquisitions since January 2018.

Image: Xapo