Bitcoin custodian and licensed private bank Xapo announced partnering with the fintech firm Circle to integrate USDC payment rails.
Xapo has become the first licensed bank in the world to add outrails to its existing USDC on-ramps. The new feature is expected to allow members to bypass costly and time-consuming SWIFT payments and instead deposit and withdraw via the stablecoin. The bank will not charge any fees for the service.
Enabling USDC Deposits and Withdrawals
According to the official press release, Xapo will be offering a 1:1 conversion rate from USDC to US Dollar. With all the stablecoin deposits automatically converted to USD, the depositors of the bank will be able to rake in benefits from a 4.1% annual interest rate return.
Seamus Rocca, CEO of Xapo Bank, called the integration of the USDC payment rails to be a “watershed moment in financial history.” The exec went on to add,
“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.”
The announcement stated that Xapo is a fully licensed and regulated bank and a member of the Gibraltar Deposit Guarantee Scheme (GDGS), which protects depositors’ dollar deposits up to $100,000. The bank further clarified that it is not involved in staking activities of any crypto deposits, nor does it have any exposure to the crypto markets since all deposits are automatically converted to USD held by the bank.
Xapo Bank recently announced integration with the Faster Payment System (FPS) to activate support for GBP settlement for account deposits and withdrawals. The bank had also collaborated with Lightspark to tap Bitcoin’s Lightning Network earlier this month.
The news comes weeks after USDC briefly de-pegged after being caught up in the collapse of Silicon Valley Bank (SVB) after the stablecoin issuer, Circle, had kept $3.3 billion of its reserves on it.
With investor confidence shaken, the stablecoin is being redeemed at a greater pace despite Circle recouping the deposits. Reports also suggested that users redeemed more than $738 million in USDC on March 20th, while Circle issued less than $9 million of the token on the Ethereum blockchain.
The subsequent events have significantly dragged down USDC’s market cap by nearly 21% so far this year.