Xapo Bank, a prominent Bitcoin custodian and licensed private bank, has partnered with Circle, an international fintech firm dedicated to facilitating swift money transfers, to become the first licensed bank globally to incorporate USDC payment rails as an alternative to SWIFT. USDC, a digital dollar or stablecoin, allows for quicker and more efficient global money transfers around the clock, with transactions often completed within an hour. Integrating outrails to its existing USDC onramps, Xapo Bank allows its members to avoid expensive and time-consuming SWIFT payments, instead enabling deposits and withdrawals via the stablecoin with no fees imposed by the bank.
Offering a 1:1 conversion rate between USDC and USD, Xapo Bank automatically converts all USDC deposits to USD, allowing members to enjoy a 4.1% annual interest rate return on deposits. As a fully licensed and regulated institution, Xapo Bank is a member of the Gibraltar Deposit Guarantee Scheme (GDGS), which guarantees members’ USD deposits up to $100,000 USD equivalent. To ensure member protection, Xapo Bank refrains from engaging in staking of any crypto deposits and maintains no exposure to the broader crypto markets, as all deposits are automatically converted to USD held by the bank.
In contrast to traditional banks, Xapo Bank does not rely on fractional reserve banking to generate revenue, as it does not engage in lending. Instead, the bank holds all customer funds in reserve and invests in short-term liquid assets, passing on the interest earned to its customers. This unique approach distinguishes Xapo Bank from its competitors and positions it as an innovative player in the financial sector.