Xapo is Now First Fully Licensed Bank to Offer USDC Withdrawals and Deposits
On Wednesday, March 22nd, Xapo bank announced it is now offering USDC deposits and withdrawals to its customers with a 1:1 conversion rate with USD. According to the press release, Xapo is now the first fully licensed bank to offer the stablecoin in such a way. It is a member of the Gibraltar Deposit Guarantee Scheme (GDGS) and, as such, guarantees deposits up to $100,000.
Xapo Now Offers USDC Withdrawals and Deposits
According to the Wednesday press release, the private Xapo bank partnered with the stablecoin issuer Circle to start offering USDC deposits and withdrawals. The bank stated the conversion rate with the dollar will be 1:1 and, since it is a member of the Gibraltar Deposit Guarantee Scheme (GDGS), it guarantees deposit of up to $100,000. The press release also points out that Xapo does not engage in staking or has exposure to the surrounding crypto markets:
A fully licensed and regulated bank, Xapo Bank is a member of the Gibraltar Deposit Guarantee Scheme (GDGS), meaning that Xapo Bank guarantees its members’ USD deposits up to *$100,000 USD equivalent. Ensuring member protection, Xapo Bank does not engage in staking of any crypto deposits and it does not have any exposure to surrounding crypto markets as all deposits are automatically converted to USD held by the Bank.
The bank also explains it does not partake in lending and does not depend on fractional reserve banking in its business model. Xapo also stated that depositors can benefit from a 4.1% annual interest rate and use the stablecoin payments as an alternative to SWIFT. The private bank, founded in 2013, also serves as a Bitcoin custodian.
USDC is a dollar-backed stablecoin issued jointly by Circle and the cryptocurrency exchange Coinbase. It recently found itself under significant pressure after it was revealed that a significant portion of its reserves was held in the now-collapsed Silicon Valley Bank. The stablecoin, however, after some stuttering, successfully maintained its stability.
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USDC Remains Stable Throughout Stablecoin and Banking Crises
While the downfall of three US banks in five days sent shockwaves throughout the banking industry, the closing of SVB had a notable effect on USDC. Soon after California regulators stepped in, it was revealed that $3.3 billion of the stablecoin’s reserves were held with the now-fallen bank.
The news kickstarted a tense weekend between March 10th and 13th as redemptions surged. As a result, the stablecoin slightly lost its peg sparking worries about USDC’s actual stability. The turbulence never turned into a calamity, however, and the stablecoin quickly recovered its peg significantly helping the liquidity of the cryptocurrency markets in the process.
Already in February, a certain level of uncertainty surrounding stablecoins emerged after a regulatory onslaught against another major coin—BUSD. In a matter of days, New York regulators ordered its issuer to stop minting the Binance-branded token, and the SEC sent a Wells notice alleging it is an unregistered security. Despite the concerns, the actions have yet to develop into a broader effort targeting stablecoins.
When will the first US-based bank start offering stablecoin withdrawals and deposits? Let us Tell us what you think in the comments below.