U.S. crypto firm Ripple has bought Switzerland-based crypto custody firm Metaco for $250 million, in its first major acquisition, Ripple said on Wednesday.

Metaco makes technology which allows financial institutions to store and manage digital assets. Its clients include Citi, BNP Paribas, and Societe Generale's digital asset arm.

Investor interest in crypto assets has cooled following a drop in cryptocurrency prices in 2022 and series of collapses at major crypto firms, including U.S. exchange FTX. Investors have become increasingly cautious about where and how crypto assets are stored, after crypto platforms freezing withdrawals left them facing large losses.

Ripple CEO Brad Garlinghouse said he expected increased demand from institutional investors for crypto custody services.

"By focusing on the infrastructure ... you're not really subject to the same gyrations of the crypto winters," he said.

"If ultimately you're solving a clear problem at scale for these customers, there's going to be demand there."

As U.S. regulators step up enforcement actions against crypto firms, Garlinghouse said that Metaco being based in Switzerland, with non-U.S. employees, added to the appeal of the company.

"The rules of the road in other markets compared to the United States are clear and it's that clarity of rules that allows companies to invest," he said.

Ripple's token, XRP, is the world's sixth largest cryptocurrency, with around $23 billion of the coin in circulation, according to market tracker CoinGecko. More than half of the $250 million acquisition was paid for in cash, and the rest in equity, Ripple said.

Privately-owned Ripple last year expressed interest in acquiring assets including from bankrupt lender Celsius.

In December 2020, Ripple was sued by the U.S. Securities and Exchange Commission (SEC), charged with conducting a $1.3 billion unregistered securities offering.

Ripple has rejected the charges, saying the token is a currency and does not need to be registered as an investment contract.

Ripple is "not in any hurry" to do an IPO, and has around $1 billion of cash on its balance sheet, Garlinghouse said.

(Reporting by Elizabeth Howcroft; editing by Louise Heavens)