Benzinga - Xapo Bank, a private bank offering both traditional banking and access to Bitcoin (CRYPTO: BTC) and stablecoins, said Tuesday that it's the world's first bank to integrate Tether (CRYPTO: USDT) payment rails.
What Happened: The phased rollout will be available to all members by the end of the month, adding to the existing USD Coin (CRYPTO: USDT) rails launched in March.
This development enables members to use the world's most popular stablecoin for payments, offering an alternative to "slow and expensive" SWIFT transactions.
USDT is an important stablecoin in the cryptocurrency ecosystem that offers many of the benefits of other cryptocurrencies without price volatility.
It is a crucial component for users who want to keep their funds in the crypto ecosystem without the risk of sharp swings in value.
Xapo Bank said in a press release it has witnessed a significant demand for stablecoin deposits and withdrawals among its members, many of whom are in emerging markets.
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The Fine Print: Since enabling USDC deposits in November, the bank said it has received $48 million in deposits and facilitated $4.5 million in withdrawals.
Furthermore, member onboarding requests increased by 19% since the USDC withdrawal function went live in March, Xapo Bank said.
The bank will allow members to deposit and withdraw USDT without fees, drawing attention to its 4.1% annual interest rate return on deposits.
Similar to its USDC offering, Xapo Bank said it will provide a 1-to-1 conversion rate from USDT to USD. All USDT deposits are automatically converted to USD, allowing members to benefit from the 4.1% annual interest rate on USD deposits.
Xapo Bank is a licensed and regulated member of the Gibraltar Deposit Guarantee Scheme, ensuring members' USD deposits up to the U.S. dollar equivalent of 100,000 euros.
Unlike traditional banks, Xapo Bank does not rely on fractional reserve banking, instead maintaining all customers' funds in reserve and investing in short-term liquid assets to pass on the earned interest to its customers.
The Last Word: Xapo Bank CEO Seamus Rocca said Xapo Bank is the only regulated bank globally offering a USD account with stablecoin rails, combining traditional banking compliance and safety with the efficiency and breadth of use of USDT.
"By growing our payment rail options, we are committed to eliminating the timely and often expensive deposit and withdrawal processes into regular banks. We are empowering our members to grow their wealth and access and spend it in a seamless manner, " he added.
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