Xapo Bank, a prominent cryptocurrency custodian, and licensed private bank has made financial history by partnering with Circle, a global fintech company, to become the first licensed bank to integrate USDC payment rails. This groundbreaking move offers an alternative to the traditional SWIFT system, providing users with faster and more efficient money transfers.
USDC, a digital dollar or stablecoin, enables rapid global transactions 24/7, including weekends, in under an hour. By integrating USDC outrails with its existing onramps, Xapo Bank allows its customers to avoid the costly and time-consuming SWIFT payment process while offering fee-free deposits and withdrawals via the stablecoin.
Additionally, Xapo Bank offers a 1:1 conversion rate from USDC to USD, ensuring that all USDC deposits are automatically converted to USD. As a result, members can enjoy a 4.1% annual interest rate return on their deposits. Xapo Bank, a fully licensed and regulated institution, is a member of the Gibraltar Deposit Guarantee Scheme (GDGS), guaranteeing member deposits up to $100,000 USD equivalent.
Xapo Bank stands out from traditional banks in that it does not rely on fractional reserve banking and does not offer loans. Instead, it maintains full reserve of its customers’ funds, which are invested in short-term liquid assets to provide the 4.1% interest rate to its customers.
Seamus Rocca, CEO of Xapo Bank, commented on the groundbreaking integration, stating, “Xapo Bank’s USDC payment rails mark a watershed moment in financial history, combining the speed and cost efficiency of the digital dollar, with the security guarantees of a licensed private bank.”
He further emphasized the bank’s commitment to protecting members’ savings, explaining that its business model allows for the return of more than 80% of the yield generated to its members.
This innovative move comes on the heels of Xapo Bank’s recent announcement of integrating with the Faster Payment System (FPS) for GBP settlement, as well as collaborating with Lightspark to integrate Bitcoin’s Lightning Network. Xapo Bank continues to enhance its payment rail options, offering its members increased currency choices and the security of a fully-regulated bank.