Xapo Bank Ditches SWIFT for USDC
Xapo Bank, a licensed private bank that safeguards Bitcoin, has joined forces with financial technology firm Circle to incorporate USD Coin (USDC) as a substitute for SWIFT. Payment rails are the underlying systems and technology used to transfer funds between parties during a financial transaction. Payment rails are available in various forms, including conventional bank wires, credit card networks, and blockchain-based platforms.
Xapo Bank has announced that its customers can now avoid the costly and complex SWIFT payment system by using the "outrails" incorporated into its existing USDC on-ramps. With the help of the USDC stablecoin, Xapo Bank members can deposit and withdraw funds without incurring any fees and can benefit from a direct conversion rate between USDC and the U.S. dollar. Moreover, all USDC deposits will be automatically converted to dollars, providing members with an opportunity to earn up to a 4.1% annual interest rate return.
Xapo Bank has stated that it is a completely licensed and regulated bank and a participant of the Gibraltar Deposit Guarantee Scheme (GDGS), which protects depositors' dollar deposits of up to $100,000.
Furthermore, Xapo Bank has stated that it does not take part in staking cryptocurrency deposits, and all deposits are automatically transformed into dollars upon reception by the bank. Xapo Bank asserts that this lessens exposure to any hazards associated with fluctuating crypto markets.
Xapo Bank has a different business model than traditional banks as it doesn't participate in lending activities or rely on fractional reserve banking to generate profits. Rather, the private bank reserves all customer funds and invests them in short-term, highly liquid assets to transfer the gained interest to its customers.
Sources:
https://cointelegraph.com/news/xapo-bank-to-enable-usdc-deposits-and-withdrawals
https://coinstats.app/news/9bSl6IfJRT_Xapo-Bank-to-enable-USDC-deposits-and-withdrawals-/
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