Circle, a crypto financial services firm, announced that it has abandoned the SWIFT payment platform in order to collaborate with Gibraltar-based Xapo Bank.
According to the release, Circle will work with Xapo Bank to incorporate USDC stablecoin payment rails as a SWIFT substitute. This partnership will see Xapo bank become the first licensed bank globally to integrate USDC payment rails.
Under this agreement, customers will be able to deposit and withdraw money using the stablecoin with no fees from Xapo Bank, thus avoiding expensive and time-consuming SWIFT payments.
Additionally, the bank will offer a 1:1 exchange rate from USDC to USD. According to the announcement, all USDC deposits will be promptly converted to USD, giving members a 4.1% annual interest rate return on savings.
The CEO of Xapo bank, Seamus Rocca stated that the auto-converted USDC deposits and withdrawals at Xapo will give crypto users a safe haven for their savings. He assured users that the platform will be available 24/7 including on weekends.
Interestingly, the announcement comes shortly after Circle announced that it had financial exposures of $3.3 billion to the now-defunct Silicon Valley Bank.
Crypto Firms Reducing Reliance on Banks
The collapse of traditional banks can have a significant impact on the financial system, and it is understandable that crypto firms may want to reduce their reliance on such institutions.
In recent years, there has been a growing trend of crypto firms turning to alternative financial services providers, such as stablecoin issuers and crypto-friendly banks, to reduce their reliance on traditional banks.
Stablecoins are digital currencies with a fixed value, usually tied to the value of a fiat currency, such as the US dollar. These tokens can be used to speed up payments and transactions, and many crypto companies have begun to adopt them in place of conventional banking services.Â
In addition to stablecoins, there are also a growing number of crypto-friendly platforms such as Unbanked that are willing to work with crypto firms. These banks and platforms are more willing to provide banking services to crypto firms, such as bank accounts, crypto cards, and credit lines than traditional banks.
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