Xapo Bank, a licensed private bank and Bitcoin custodian, has partnered with Circle, a fintech company, to become the first licensed bank globally to incorporate USDC payment rails as an alternative to SWIFT. This watershed moment in digital asset innovation allows Xapo Bank members to deposit and withdraw via USDC, a digital dollar or stablecoin, which is faster and more efficient than SWIFT, and can be used to send and receive money globally, 24/7, in under an hour. By adding outrails to its existing USDC onramps, Xapo Bank is enabling its members to bypass the high cost and long processing times associated with SWIFT payments. The bank is offering a 1:1 conversion rate from USDC to USD, and all USDC deposits are automatically converted to USD, resulting in a 4.1% annual interest rate return on deposits.
As a fully licensed and regulated bank, Xapo Bank is a member of the Gibraltar Deposit Guarantee Scheme (GDGS), guaranteeing members’ USD deposits up to $100,000 USD equivalent. The bank does not engage in staking of any crypto deposits and does not have any exposure to surrounding crypto markets, as all deposits are automatically converted to USD held by the bank. Xapo does not lend and, therefore, does not rely on fractional reserve banking to make money, as its core business model is holding customers’ funds in reserve and investing in short-term liquid assets to pass the interest earned to its customers.
Seamus Rocca, CEO of Xapo Bank, explained that “enabling auto converted USDC deposits and withdrawals at Xapo Bank gives crypto members a safe haven for their savings. Running 24/7 including weekends, we eliminate the anxiety of keeping your money in exchanges and the hassle of expensive off ramps into traditional banks.” Xapo Bank is committed to providing members with additional currency choices managed with the security of a fully-regulated Bank, and this news comes after the bank’s integration with the Faster Payment System (FPS) to activate support for GBP settlement for account deposits and withdrawals. The bank has also announced an integration with Bitcoin’s Lightning Network earlier this month.