Bitcoin custodian and licensed private bank Xapo announced its partnership with fintech firm Circle to integrate USDC payment rails.
Xapo has become the first licensed bank in the world to add exits to its existing USDC on-ramps. The new feature is expected to allow members to bypass expensive and slow SWIFT payments and instead deposit and withdraw via the stablecoin. The bank will not charge any commission for the service.
Enabling USDC deposits and withdrawals
According to the official Press release, Xapo will offer a 1:1 USDC to US dollar conversion rate. With all stablecoin deposits automatically converted to USD, bank depositors will be able to benefit from an annual interest rate of 4.1%.
Seamus Rocca, CEO of Xapo Bank, called the integration of USDC payment rails a “defining moment in financial history.” The executive went on to add,
“Enabling automatically converted USDC deposits and withdrawals at Xapo Bank gives crypto members a safe haven for their savings. Running 24/7, including weekends, we take the anxiety out of keeping your money on exchanges and the hassle of costly outings to 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 any crypto deposits, nor does it have any exposure to the crypto markets, as all deposits are automatically converted to USD held by the bank.
Xapo Bank recently announced integration with Fastest Payment System (FPS) to enable support for GBP settlement for account deposits and withdrawals. The bank had also collaborated with Lightspark to leverage Bitcoin’s Lightning Network earlier this month.
USDC turmoil
The news comes weeks after the USDC briefly decoupled after getting caught up in the collapse of Silicon Valley Bank (SVB) after stablecoin issuer Circle kept $3.3 billion of its reserves in it.
With investor confidence shaken, the stablecoin is trading at a higher rate even though Circle is picking up deposits. The reports also suggested that users redeemed over $738 million worth of USDC on March 20, while Circle issued less than $9 million of the token on the Ethereum blockchain.
Subsequent events have significantly reduced USDC’s market cap by nearly 21% year-to-date.
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