Xapo Bank has made an about its latest partnership with the stablecoin issuing company. According to the officials at the licensed private bank and the Bitcoin custodian, they have partnered with Circle, a financial technology company.
The reason behind the Partnership
The reason behind the partnership is to utilize the technology offered by Circle in order to offer the USD Coin (USDC) utility to the users.
With the integration of the USDC technology, the users will be able to carry out deposits and withdrawals using the stablecoin.
As per the officials, the new utility will be offered to the users to provide SWIFT’s alternative. The teams have revealed that it is the payment rails that the users will be able to make use of with the USDC technology.
The term “rails” refers to the movement of funds between the senders and the receivers. These financial transactions are facilitated through the technology and infrastructure offered by Circle.
The rails are known for taking place in multiple forms. The technology and infrastructure include blockchain-based platforms, credit card networks, and traditional bank wires.
Reason for the New Service
The Xapo Bank officials have revealed the main reason behind the introduction of the new service.
The teams said that they have been monitoring the financial markets for a long time. They established that the SWIFT payment systems were proving to be very expensive and problematic for the users.
Many users find it difficult to deal with the SWIFT processes, which is why they decided they had to come up with something new and special for the users.
Their entire goal was to facilitate the users as much as possible and this is when they came up with a new product.
Now, with the integration of the new technology, users will no longer have to pay huge fees or have to go through lengthy procedures to make deposits.
Similarly, the users will not face any problems when processing withdrawals through the platform. They will be able to carry out these transactions through the USDC payment platform.
As the users deposit and withdraw funds from the Xapo platform using USDC, they will incur no fees. There will be no fees that the users will incur when carrying out deposits and withdrawals.
The USDC transactions will be processed with a 1:1 ratio with the dollar. The moment the users carry out the deposits using the stablecoin, they will be converted into the USDC as soon as they enter their Xapo accounts.
The deposits that they make would act as savings accounts as the users will be eligible for receiving interest on their deposits. As per the officials, the interest would be up to 4.1% that the users will be receiving.
The platform wants to facilitate the users as much as possible and in the process, they will be able to make huge profits as well. They will be able to earn interest rate returns from their deposits.
Xapo Bank is Licensed
While making the announcement, the Xapo Bank has made it clear that they exist as a highly regulated and licensed bank. Apart from that, they are also members of the GDGS.
Being a member of the GDGS means that the deposits made at the banking firm are protected with up to $100,000 in support funds.
The bank has clarified that although it offers interest rate returns, it does not offer any kind of staking services for cryptocurrencies. The users do not get to have any kind of stakes on the cryptocurrencies they stake at the firm.
On top of that, the business has clarified that it does not offer any kind of lending activities or services to the users either.
The bank has also clarified that it does not even aim to generate profits through fractional reserve banking strategies.
