The leading Bitcoin custodian and a subsidiary of Coinbase, Xapo Bank joined hands with the stablecoin issuer Circle to enable USDC deposit and withdrawal at zero-fees, becoming the first licensed bank to do the same to create a tough competitor of the SWIFT system.
Xapo Bank will allow users to deposit their USDC at a 1:1 conversion rate from USDC to USD, and earn a 4.1% annual interest rate return on their deposits
As USDC leverages blockchain technology, users can make transactions in a faster and more efficient manner in any corner of the world. Through the integration of USDC into its existing infrastructure, Xapo Bank strives to save users from costly and time-consuming SWIFT payments.
The bank is a member of the Gibraltar Deposit Guarantee Scheme (GDGS) that provides protection to customer’s USD deposits up to $100,000 USD. To ensure safety, Xapo Bank keeps its distance from crypto staking and does not have any exposure to surrounding crypto markets as all deposits are automatically converted to USD held by the Bank.
Unlike the fractional reserve banking system, Xapo Bank held all customers’ funds in reserve and invested in short-term liquid assets to pass interest to its customers.
Seamus Rocca, CEO of Xapo Bank stated in the announcement, “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 news comes after Coinbase offered $3.3 billion to Circle to rescue USDC after it lost its peg with Dollar. Reportedly, Circle’s $3.3 billion holdings are stuck at the bankrupt bank, Silicon Valley Bank.