Circle, the company behind the USDC stablecoin, has picked Xapo as its banking partner to bypass costly and time-consuming SWIFT payments.
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Xapo said in a press release it has become the first licensed bank to integrate USDC payment rails as an alternative to SWIFT. The Gibraltar-based bank will offer a 1:1 conversion rate from USDC to USD. Xapo added:
"All USDC deposits at Xapo Bank are automatically converted to USD, meaning that members can benefit from a 4.1% annual interest rate return on deposits."
Xapo pointed out that unlike traditional banks, it doesn't lend its assets and doesn't rely on "fractional reserve." Instead, Xapo invests in short-term, highly credit rated, money market instruments as well as short-term bonds.
Circle changes its banking partner after Silicon Valley Bank — where the company held over $3 billion of USDC's reserves — wound down its operations. After that, Circle Internet Financial expanded its relationship with Bank of New York Mellon Corp as primary custodian for its reserves of USDC.
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