Xapo Bank and Circle to offer USDC deposits and withdrawals

Wednesday 29 March 2023 13:06 CET | News

Bitcoin custodian and licensed private bank Xapo Bank has partnered with financial technology company Circle to integrate USD Coin payment rails as an alternative to SWIFT.


Payment rails refer to the infrastructure and technology used to facilitate the movement of funds between parties in a financial transaction. Payment rails come in many forms, including traditional bank wires, credit card networks, and blockchain-based platforms.

Xapo Bank says that the new feature allows its members to bypass the cumbersome and expensive SWIFT payment system through outrails added to its existing USDC on-ramps. By utilising the USDC stablecoin, members can deposit and withdraw funds from Xapo without fees and benefit from a one-to-one conversion rate from USDC to the USD. In addition, all USDC deposits are automatically converted to the dollar, enabling members to earn an annual interest rate return of up to 4.1%.

According to the announcement, Xapo Bank is a fully licensed and regulated bank and a member of the Gibraltar Deposit Guarantee Scheme (GDGS), which protects depositors’ USD deposits up to USD 100,000. The bank shared that it does not engage in the staking of any cryptocurrency deposits, and all deposits are automatically converted to the USD upon receipt by the bank. Xapo claims this reduces exposure to any risks associated with the fluctuating crypto markets.

Bitcoin custodian and licensed private bank Xapo Bank has partnered with financial technology company Circle to integrate USD Coin payment rails as an alternative to SWIFT.


Xapo claims its business model differs from traditional banks as it does not engage in lending activities and does not rely on fractional reserve banking to generate profits. Instead, the private bank maintains all customer funds in reserve and invests them in short-term, highly liquid assets to pass on the earned interest to its customers.

SWIFT developing its own digital currency project

Recently SWIFT has announced the completion of a sandbox test for its API-based central bank digital currency project in collaboration with 18 banks. The collaborative sandbox testing period lasted 12 weeks and involved almost 5,000 simulated transactions between two different blockchain networks and with existing fiat-based payment systems. The solution was able to support a seamless exchange of CBDCs, even those built on different platforms, which prompted a positive response from participants. 

This sandbox testing environment was designed to allow central and commercial banks to analyse the solution, experiment with its features, validate its effectiveness, and share what they have discovered to assist with its development. In the following months, central banks will receive access to a beta version of the solution that will allow them to conduct further testing.

Circle expanding its footprint

The US-based company has filed for two regulatory approvals in France in a bid to receive full authorisation under the DASP regulatory regime. Circle filed applications to become both a licensed Electronic Money Institution and a registered Digital Asset Service Provider (DASP) under the requirements set out by the Autorité de Contrôle Prudentiel et de Résolution (ACPR) and Autorité des Marchés Financiers (AMF).

Circle officials talked about their European growth strategy and highlighted France’s efforts towards crypto regulation and how these efforts align with Circle's vision for the future of the digital payments sector.

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Keywords: SWIFT, digital currency, crypto, crypto asset
Categories: DeFi & Crypto & Web3
Companies: Circle, SWIFT
Countries: World
This article is part of category

DeFi & Crypto & Web3




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