Xapo Bank, a bitcoin custodian that also operates as a privately licensed bank, has teamed up with Circle to develop an alternative to SWIFT based on USDC payment rails. The bank claims that it has installed rails on the already existing USDC onramps.
As a direct result of this, users of Xapo Bank are able to make quick deposits and withdrawals utilizing USDC.
According to Seamus Rocca (1), CEO of Xapo Bank, the new feature combines the benefits of digital currency, such as speed and cost-efficiency, with the advantages of a licensed private bank, namely security guarantees. He said:
“With allowing auto-converted USDC transactions at Xapo Bank, cryptocurrency members now have a secure location for their savings,”
Details Regarding the Operation of the USDC Payment Rails
Despite the fact that SWIFT is the de facto standard for all international financial dealings, the process is laborious and expensive.
Customers of Xapo Bank will, however, have access to the USDC payment rail, which will enable them to convert USD straight to USDC and send that amount.
In addition to this, the bank is providing a conversion rate of 1:1 from USDC to USD without charging any additional fees.
Xapo Bank is a participant in the Gibraltar Deposit Guarantee Scheme (GDGS), which enables the bank to provide deposit insurance for its customers up to the equivalent of one hundred thousand dollars.
When you deposit USDC into Xapo Bank, the currency will be converted into USD without any additional action required on your part. It is interesting to note that the bank does not engage in staking, activities related to lending, or fractional reserve banking in order to generate profits.
Rocca claims that this is then deposited in money-market funds and short-term bonds, which enables members to receive a daily interest rate of 4.1%.
In addition, the financial institution levies an annual membership fee of $150 per client. Because of this, the bank is able to keep its liquidity at a constant level and continue to pay interest to its customers.
Xapo Bank: Making Transactions Quicker and Easier
In addition to incorporating a USDC payment rail, Xapo Bank has recently formed a partnership with Faster Payment System (FPS) to expand its reach around the globe.
Customers of Xapo Bank will have the ability, once the FPS integration is complete, to send up to one million pounds directly from their XApo USD accounts in real time.
In a similar vein, the bank disclosed (2) its intention to work together with Lightspark.
Customers of Xapo Bank now have the ability to perform instantaneous, low-cost, and delay-free transactions of up to $100 thanks to the bank’s integration with the Lightning Network.
Despite the fact that it has been rather successful as a private bank, the financial institution has long-term plans to expand its offerings to include Wealth Management in addition to other services such as secured lending and asset protection.