Circle sidesteps SWIFT after bank collapses, turns to Gibraltar's Xapo Bank

Quick Take

  • Xapo Bank will offer one-to-one dollar conversion of USDC in collaboration with Circle, and will support USDC transfers so members can bypass the SWIFT payment system, the bank said in a statement.

The SWIFT network may be in for some competition after Gibraltar-based Xapo Bank said it will collaborate with stablecoin issuer Circle to offer to members a means bypass the banking payment system with USDC. 

Xapo will offer one-to-one dollar conversion of USDC and convert all deposits of USDC into USD, with a 4.1% annual interest rate on deposits, the bank said. SWIFT is the current system used by institutions worldwide and enables global bank-to-bank payments and transfers. Xapo said that it refrains from lending or fractional reserve banking practices and holds customer funds in reserves and short-term liquid assets. The bank charges $150 to members to recover overhead.

The stablecoin recovered dollar parity after Circle CEO Jeremy Allaire said on Twitter that all of the company’s SVB related deposits were secure.

Circle and Xapo did not immediately respond to requests for comment.

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