Xapo Bank to enable USDC deposits and withdrawals

Bitcoin custodian and licensed backstage slope Xapo Bank has partnered with fiscal exertion institution Circle to integrate USD Coin (USDC) outgo rails arsenic an alternate to SWIFT. Payment rails notation to the infrastructure and exertion utilized to facilitate the question of funds betwixt parties successful a fiscal transaction. Payment rails travel successful galore forms, including accepted slope wires, recognition paper networks, and blockchain-based platforms.

Xapo Bank shared that the caller diagnostic allows its members to bypass the cumbersome and costly SWIFT outgo strategy done outrails added to its existing USDC onramps. By utilizing the USDC stablecoin, members tin deposit and retreat funds from Xapo without fees and payment from a one-to-one conversion complaint from USDC to the U.S. dollar. In addition, each USDC deposits are automatically converted to the dollar, which enables members to gain an yearly involvement complaint instrumentality of up to 4.1%.

According to the announcement, Xapo Bank is simply a afloat licensed and regulated slope and a subordinate of the Gibraltar Deposit Guarantee Scheme (GDGS), which protects depositors' dollar deposits up to $100,000. Additionally, Xapo Bank shared that it does not prosecute successful the staking of immoderate cryptocurrency deposits, and each deposits are automatically converted to the dollar upon receipt by the bank. Xapo claims this reduces vulnerability to immoderate risks associated with the fluctuating crypto markets.

Xapo claims its concern exemplary differs from accepted banks arsenic it does not prosecute successful lending activities and does not trust connected fractional reserve banking to make profits. Instead, the backstage slope maintains each lawsuit funds successful reserve and invests them successful “short-term, highly liquid assets” to walk connected the earned involvement to its customers.

Related: Traditional banks trust connected ‘tiny buffer’: Paris Blockchain Week 2023

As antecedently reported by Cointelegraph, Moody's Investors Service warned that USDC’s depeg, which occurred connected March 10, could negatively interaction the adoption of stablecoins and pb to accrued regulatory scrutiny. The recognition standing bureau argued that the accepted banking sector's caller turmoil and the de-pegging of USDC could summation absorption to fiat-backed stablecoins.

USDC’S depeg occurred pursuing the sudden illness of Silicon Valley Bank, oregon SVB, connected March 10. The illness of SVB was a important hazard lawsuit for USDC issuer Circle Internet Financial, which had $3.3 cardinal successful assets tied up successful the bank.