Tether (USDT) removes SWIFT for USD
- Xapo Bank has integrated Tether payment rails instead of SWIFT for money transfer.
- The move is set to usher in a new era of financial revolution.
In a groundbreaking development, the financial world has witnessed a shift as Tether (USDT), the popular stablecoin, has removed SWIFT for USD transfers in Xapo Bank. Building on its successful launch of USDC strips in March, Xapo Bank is taking its services a step further by enabling members to tap into the world’s most widespread adopted stablecoin, USDT, for payments.
according to announcementthis move provides an alternative to the traditional SWIFT rails, and offers users a faster, more efficient and cost-effective payment solution.
GIBRALTAR-BASED BANK XAPO LAUNCHES USD ACCOUNTS ON TETHER RAILS INSTEAD OF SWIFT
We will see more of this. Tether improves the banking system.
— Gabor Gurbacs (@gaborgurbacs) 5 June 2023
Consequently, Xapo Bank has now become the world’s first Fintech institution to use USDT infrastructure to transfer US dollars between accounts. This step not only highlights Xapo Bank’s commitment to innovation, but also demonstrates stablecoin’s growing acceptance in the existing banking system.
Importantly, the integration is complete compatible with Markets in Crypto-Assets Regulation (MiCA), which shows Xapo Bank’s respect for regulatory standards.
In contrast to traditional banks that practice fractional reserve banking, Xapo Bank operates on a different business model. It does not lend or rely on using customers’ deposits for profit. Instead, the bank keeps all customer money in reserve and invests it in short-term liquid assets.
By doing so, Xapo Bank hopes to pass on the benefits of any interest from these investments to its customers, increasing the value and returns associated with their deposits.
In addition to integrating USDC and USDT payment rails, Xapo Bank previously integrated with the Faster Payment System (FPS) to support GBP settlement for account deposits and withdrawals. Furthermore, Xapo Bank has announced an integration with Bitcoin’s Lightning Network in collaboration with Lightspark.
The uniqueness of the Tether (USDT) integration.
While commenting on the uniqueness of the bank’s offering, Seamus Rocca, CEO of Xapo Bank emphasized that the service combines the compliance and security of a traditional bank with the speed, efficiency and versatility of USDT, enabling Xapo Bank to deliver an exceptional banking experience to its members.
In addition, Xapo Bank, which is fully licensed and regulated, offers its members deposit protection insurance through its membership of the Gibraltar Deposit Guarantee Scheme. This means that deposits made in USD are guaranteed by Xapo Bank up to the equivalent of €100,000.
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To reduce risk associated with USDT deposits, Xapo Bank automatically converts such deposits into USD and deposits them into the member’s account. This approach ensures that the bank maintains a conservative and secure approach to its business, prioritizing the protection and stability of members’ funds.
In particular, the use of Tether (USDT) for USD transfers in Xapo Bank sets a precedent for future developments in the financial industry. As other financial institutions witness the benefits of blockchain technology, they are likely to follow suit, leading to a wider acceptance and integration of crypto into mainstream finance.
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