Xapo Bank says it is the first regulated bank to accept USDC deposits and withdrawals. Issued by Circle, USDC is the second largest stablecoin by market cap, pegged to the US dollar.
Xapo Bank is regulated and based in Gibraltar.
Xapo Bank states that USDC holders with accounts at the bank can now dodge costly and slow wire transfers etc., by choosing USDC. The bank is describing its service as an alternative to SWIFT with no fees charged by the bank.
Xapo states that it is offering 1 to 1 conversion rate of USDC to US dollars and all USDC deposits are converted automatically to dollars with account holders earning 4.1% interest on deposits.
Xapo Bank is a member of the Gibraltar Deposit Guarantee Scheme (GDGS), so USD deposits are guaranteed up to €100,000 (in the dollar equivalent). Xapo notes that it does not engage in staking of any crypto deposits and it does not have any exposure to surrounding crypto markets.
As well, Xapo states that it does not lend and therefore does not rely on fractional reserve banking to make money as its core business model.
Seamus Rocca, CEO of Xapo Bank, said the USDC payment rails mark a watershed moment in financial history as providing speed, low cost, and security.
“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,” said Rocca, adding that “Xapo Bank was built to protect members’ savings. Unlike many traditional banks, we do not offer customer loans and therefore, all of our customers’ money is held dollar for dollar on our balance sheet. It is invested in very short dated, highly credit rated, money market instruments and short-term bonds.”
Xapo does charge a $150 membership fee to get an account.
Xapo Bank recently announced that had integrated with the Faster Payment System (FPS) for GBP settlement for account deposits and withdrawals. Xapo has also announced an integration with Bitcoin’s Lightning Network, in collaboration with Lightspark.
