Xapo Bank Fully Integrates USDC Payment Rails For Zero-Fee Deposits and Withdrawals

The move makes Gibraltar-based Xapo the first fully licensed bank in the world to offer USDC on-and off-ramps as a fast, free, 24/7 alternative to the expensive and slow SWIFT system used for international payments.

Jack Martin

Mar 23, 2023 - 2 min read

Xapo Bank, the noted bitcoin custodian and licensed private bank registered in Gibraltar, yesterday announced that it had partnered with the stablecoin issuer Circle to fully integrate USDC payment rails for both deposits and withdrawals, becoming the first fully licensed bank to do so.

By adding new outrails to its existing USDC on-ramp, the bank has enabled members to avoid the excessive costs and up to four day wait for an international SWIFT transfer. Instead they are able to send and receive money around the world in around an hour, with zero fees charged by Xapo.

CEO Seamus Rocca claimed that the bank offered crypto members “a safe haven for their savings”, saying:

"Xapo Bank's USDC payment rails mark a watershed moment in financial history, combining the speed and cost efficiency of the digital dollar, with the security guarantees of a licensed private bank… 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.”

As Xapo Bank doesn’t offer loans or rely on fractional reserve banking to make a profit, customer money is held dollar for dollar on its balance sheet, making it immune to a traditional ‘bank run’. Instead it invests in short term liquid assets and passes this benefit on to members in interest payments.

The bank offers 1:1 rates on USDC/USD conversions, and incoming USDC is automatically converted to USD and deposited into the members account, earning an annual interest rate of 4.1% in the process.

Xapo Bank says that it constantly strives to increase its payment rails options, and has certainly been putting its money where its mouth is of late. Just last week it added support for GBP deposits and withdrawals from its USD accounts through the UK’s Faster Payments System, enabling almost instant currency conversion and transfer to UK accounts.

It can’t have been a coincidence that this announcement came in the wake of the UK's crackdown on crypto and Binance’s announcement about suspending its Faster Payments System GBP on/off-ramp in May. One would imagine that when combined with the new USDC payment rails, Xapo will see a surge in signups from UK-based crypto users.

In a February 27 update to its apps on iOS and Google devices the bank also added Lightning Network integration to its Bitcoin accounts, allowing members to make instant payments for small purchases of up to $100 at any outlet accepting Lightning payments.

A crypto-friendly bank with innovative payment rails and no risk of collapse due to fractional reserve practices? We’ll be Observing future developments at Xapo very closely indeed.