Bitcoin deposits at Xapo Bank lack the deposit insurance protection available for fiat holdings, creating asymmetric risk where BTC is exposed to custodial failure while USD is covered up to £120,000.

"Eligible fiat deposits are covered by the Gibraltar Deposit Guarantee Scheme up to £120,000 per depositor per credit institution. BTC deposits are not protected by the Gibraltar Deposit Guarantee Scheme."

"Public proof-of-reserves detail is limited; no public Merkle liability proof or full audit report was provided. Xapo states that it uses financial statement audits and publishes capital/liquidity transparency information, but the provided notes say full audit reports are not publicly shared, and no public Merkle liabilities proof or wallet-by-wallet reserve attestation was provided."