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Xapo Private Bank, a highly regulated institution that accepts Bitcoin and USDC deposits, has seen a significant uptick in deposits since the recent crackdown on BUSD minting by Paxos.
The New York Department of Finance Service’s announcement that BUSD tokens were to be discontinued by 21 February, followed by the Securities and Exchange Commission’s classification of the coin as an “unregistered security,” caused concern among investors in crypto exchanges. In response, Binance, the exchange that utilised BUSD, saw a staggering $900 million in crypto leave the platform in a single day.
In an effort to maintain public trust, Binance announced plans to form a crypto consortium to address any regulatory crackdowns and create a new stablecoin, “True USD.” Despite these efforts, total BUSD outflow across all exchanges is nearing 500 million, with many investors converting their holdings to other stablecoins like USDC and Tether, and some even switching exchanges.
Xapo Private Bank, licensed by the UK and EU-regulated Gibraltar Financial Services Commission, offers a secure alternative for investors seeking banking safety. Unlike traditional exchanges, Xapo is a fully licensed, highly liquid international private bank that offers a deposit guarantee of up to USD 100,000 and converts Bitcoin and USDC deposits instantly into USD.
Xapo chief executive Seamus Rocca attributes the 43% growth in USDC deposits since the BUSD bubble burst to the fact that the bank offers a service with far less risk than traditional exchanges, as Xapo is a regulated crypto company that transformed into a digital bank that is crypto-native.
Rocca notes that trust is key in the current crypto climate and that Xapo’s evolution into a secure crypto company that accepts deposits and is a regulated bank makes it a “wildly different proposition to an exchange.”
Xapo’s USDC service, for example, doesn’t keep the money for the user like an exchange would. Instead, Xapo funds the user’s deposit-guaranteed bank account, ensuring their funds are safe in a trusted company and jurisdiction while also earning 4% interest.
The South African government’s recent move to make crypto a taxable asset has highlighted the importance of trust in the industry. Rocca emphasises that investors don’t have to settle for less and that Xapo’s regulatory compliance and status as a secure, regulated bank make it an ideal option for those seeking to guarantee their funds.