The issuer of the USDC stablecoin — Circle — has signed an agreement with Gibraltar-based Xapo Bank to bypass costly and time-consuming SWIFT payments. This is stated in the press release.
Xapo will convert all deposits of stablecoins on a 1:1 basis to the US dollar. The bank also offered an annual interest rate of 4.1% for holding USDC.
The financial institution said it would refrain from lending and fractional-reserve practices, keeping clients’ funds in short-term liquid assets.
“Xapo Bank enables participants to bypass costly and time-consuming SWIFT transactions, and instead deposit and withdraw funds in the USDC stablecoin at no cost to us,” the bank said.
Circle decided to change its partner after collapsed Silicon Valley Bank (SVB).
On March 11, USDC lost its peg to the dollar following reports that Circle kept $3.3 billion of the asset’s reserve with SVB.
The company stressed that it uses corporate funds and external capital to support the stablecoin. Later, Circle, like other SVB depositors, received full access to its deposits.
According to the Arkham analytics platform, since March 10 the issuer has burned about 6.2 billion coins.
Earlier, due to the USDC depeg, lost the peg of several algorithmic stablecoins such as DAI and FRAX.