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Xapo Bank, a fully licenced private bank that combines traditional banking with access to Bitcoin and stablecoins, has become the first bank in the world to integrate Tether (USDT) payment rails. Beginning with a phased rollout, the payment rails will be fully available to all members by the end of May. Building on its existing USDC rails that were launched in March, the bank is now enabling members to leverage the world’s most widely adopted stablecoin for payments as an alternative to time-consuming and costly SWIFT rails.

With a market cap of USD $82 billion, USDT is the world’s most used stablecoin and one of the most traded cryptocurrencies by volume, having pioneered the digital dollar concept. It empowers growing ventures and innovation throughout the blockchain space, providing a quicker and more efficient way for millions of people across the globe to send and receive money for remittances and other payments. It is also particularly popular in emerging markets suffering from hyperinflation and economic uncertainty.

More Appetite for Stablecoin

Xapo Bank has seen a strong appetite for the efficiency of stablecoin deposits and withdrawals amongst its members, many of whom are based in emerging markets. Since enabling USDC deposits in November, it has received USD $48 Million in USDC deposits and enabled USD $4.5M in USDC withdrawals since the function went live in March. It has also experienced a 19% increase in member onboarding requests since the USDC withdrawal function went live in March. Xapo Bank offers a 1:1 conversion rate from USDC to USD. All USDC and USDT deposits received by Xapo Bank are automatically converted to USD, meaning members can benefit from a 4.1% annual interest rate on daily USD deposits.

By allowing members to deposit and withdraw using USDC and USDT with no fees charged by Xapo, Xapo Bank is bringing its attractive 4.1% annual interest rate return on deposits to the attention of a new cohort of potential members looking for an alternative to SWIFT payments.

Increasing Rates

Xapo Bank increased the interest rate on US dollar deposits to 4.1% earlier this year and also introduced an annual 1% interest on member Bitcoin deposits, divided over the year and paid out daily. This interest rate increase on US dollar deposits doubles the rate the bank previously offered and is significantly higher than the industry average.

The raise is part of the bank’s interest rates restructuring, which is based on market conditions and aims to ensure that Xapo Bank members can continue to earn sustainable returns on their deposits. By allowing members to deposit and withdraw using USDC and USDT with no fees charged by Xapo, Xapo Bank is bringing its attractive 4.1% annual interest rate return on deposits to the attention of a new cohort of potential members looking for an alternative to SWIFT payments.

Guaranteed Deposits

A fully licenced and regulated bank, Xapo Bank is a member of the Gibraltar Deposit Guarantee Scheme, meaning that Xapo Bank guarantees its members’ USD deposits up to the US dollar equivalent of €100,000. Unlike traditional banks, Xapo Bank does not lend and therefore does not rely on fractional reserve banking to make money as its core business model. Instead, it has all its customers’ fiat funds in reserve and invested in short-term liquid assets to pass the benefit of that interest earned to its customers.

Xapo Bank’s member deposits in Bitcoin are fully segregated and are never lent or leveraged. Xapo Bank is held to the same legal standards of law as any EU or UK bank and is audited by one of the big four, KMPG, ensuring that members can feel safe that their assets are protected.

Seamus Rocca, CEO at Xapo Bank, said: “Xapo Bank is the only regulated bank offering a USD account with stablecoin rails. This unique offering combines the compliance and safety of a traditional bank with speed, efficiency, and breadth of use of USDC and USDT. We are growing our payment rail options to eliminate the timely and often expensive deposit and withdrawal processes.”

Striving for More Growth

Xapo Bank is constantly striving to grow its payment rails options, offering members additional currency choices managed with the security of a fully-regulated Bank. Reflecting this, in addition to the USDC and USDT payment rails, Xapo Bank previously integrated with the Faster Payment System (FPS) to activate support for GBP settlement for account deposits and withdrawals. This means members can make payments directly to UK Banks and participating territories and wallets like Wise, Revolut or many exchanges.

Xapo Bank also recently announced that it had become the world’s only fully licensed private bank to partner with Lightspark and integrate with the Lightning Network to enable lightning-fast Bitcoin payments for its members. The integration enables Xapo Bank members to pay for small purchases of up to USD $100 instantly to any vendor who accepts Lightning payments without suffering high transaction fees and long blockchain confirmation waiting times.

Since launching this in March 2023, Xapo Bank has seen consistent daily use of the payment network by its members. During the recent period of high Bitcoin fees, Xapo experienced a spike in Lightning transactions amongst its members, highlighting that the Lightning network is a great alternative to the traditional Layer 1 Bitcoin network.

To learn more about Xapo Bank, visit: https://www.xapo.com/.

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