As the going gets tough for crypto, will the underlying blockchain technology get going?
That was one of the top takeaways from the conversation on cryptocurrencies, digital assets, and the blockchain at FinovateEurope in London last week. We may be in a crypto winter – if not, as author Steven Van Belleghem quipped during his keynote address, a crypto “ice age.” But while the sun may be setting on the initial promise of cryptocurrencies, a dawn of new use cases and novel user interfaces may arrive sooner than we think.
To that end, it is interesting that much of this week’s crypto news revolves around stablecoins and ways that innovative banks and fintechs are using the technology to better serve customers.
Xapo Bank partners with Circle to leverage USDC as Swift alternative
One example of this trend comes in the news that Xapo Bank has teamed up with Circle to become the first licensed bank to integrate USDC payment rails as an alternative to SWIFT. The partnership will enable the Bitcoin custodian and private bank to offer its members the ability to make deposits and withdrawals via the USDC stablecoin without having to pay any fees to Xapo Bank. The institution is offering a 1:1 conversion rate from USDC to USD, further helping its customers avoid both the time and cost of SWIFT-based payments.
“Xapo Bank’s USDC payment rails mark a watershed moment in financial history, combining the speed and cost efficiency of the digital dollar, with the security guarantees of a licensed private bank,” Xapo Bank CEO Seamus Rocca said. “Enabling auto converted USDC deposits and withdrawals at Xapo Bank gives crypto members a safe haven for their savings.”
USD deposits are guaranteed up to $100,000 courtesy of Xapo Bank’s membership in the Gibraltar Deposit Guarantee Scheme (GDGS). The bank noted that all USDC deposits are automatically converted to USD, giving members a 4.1% annual interest rate return on deposits.
Stables issues USDC-to-fiat Mastercard powered by Marqeta
A new partnership between card issuing platform Marqeta and Stables, a stablecoin-based digital wallet formerly known as Tiiik, will enable Stables customers to convert stablecoins into fiat currency and spend wherever Mastercards are accepted, online or in-store. Stables will leverage Marqeta’s dynamic spend controls and Just-in-Time funding capabilities to give its customers broader ability to transact with their stored stablecoins.
“Stables is committed to expanding what’s possible with stablecoins, giving people more flexibility and choice in their payment habits,” Stables co-founder and CEO Erez Rachamim said. “With increasing demand for digital assets, we’re thrilled to work with Marqeta to develop a card that enables more seamless spending on everyday items.”
Headquartered in Sydney, Australia and founded in 2021, Stables rebranded from tiiik at the beginning of this year. In a statement at the company blog, co-founder Bernardo Bilotta wrote, “This update better encapsulates what we can plan to offer to our loyal community. It highlights our dedication to expanding our focus to solve stablecoin related payment problems and any new use cases/services built around stablecoins.”
Circle supports USDC; sets up European HQ in France
We mentioned Circle earlier with regard to Xapo Bank’s new payments offering. Circle also made crypto headlines for its decision to set up its European headquarters in what it referred to as the “crypto-friendly climate” of France. The company, founded in 2013 and maintaining a U.S.-based headquarters in Boston, Massachusetts, has applied to French regulators to become both a licensed Electronic Money Institution (EMI) and a fully registered Digital Assets Service Provider (DASP). Securing these approvals would make Circle the first company to receive full authorization under the DASP regulatory regime.
“France’s comprehensive efforts towards innovation-forward crypto regulation are commendable and closely align with Circle’s vision for the future of the digital payments sector,” Circle CEO and co-founder Jeremy Allaire said. “The DASP registration provides an initial path to support sensible digital asset innovation.”
Circle is the issuer of the USDC stablecoin. The company has come under pressure in the wake of the Silicon Valley Bank crisis as its relationship with another troubled bank, Signature Bank, limited its ability to process minting and redemption of USDC. A de-pegging of USDC, in which the stablecoin lost its one-to-one relationship to the U.S. dollar resulting in investors cashing out of the digital asset by more than $2.6 billion in 24 hours, only added to the company’s woes of late.
Centi launches Swiss franc stablecoin
Swiss fintech Centi, which was founded in 2020, has announced the launch of its Swiss Franc pegged stablecoin. The stablecoin is backed 1:1 by a Swiss bank, and will serve as the foundation for the company’s Global Payment Network. The new offering will enable merchants to get direct payment settlement in their bank accounts in the fiat currency of their choice. Merchants will not need to make any changes to their current accounting processes nor do they need to have extensive cryptocurrency knowledge. Centi noted that its stablecoin will help bring buying power to both buyers and sellers by eliminating the fees and costs charged by credit card companies.
Centi’s Global Payment Network leverages a low-cost transaction model based on a micropayments facilitation foundation. This enables the network to offer the advantages of both cash and electronic payments, as well as seamless integration with online, POS, and cashier payment systems. By leveraging blockchain technology, the network is able to offer fees that are as much as 90% less expensive compared to competing payment services.
“With Centi we have created a new payments universe,” Centi CEO and founder Bernhard Müller said. “Our technology uses the efficiency of the blockchain to lower payment processing fees without requiring users to understand anything about crypto. Our payments solution is a first use case implementation of this technology with many others expected to follow it.”
LiquidStack raises capital to help lower carbon footprint of bitcoin mining
One of the earliest antagonists to the bitcoin and cryptocurrency movement were environmental activists who decried the impact of bitcoin mining on the environment.
This week we learned that LiquidStack, a Massachusetts-based immersion cooling company, has secured Series B funding to build a manufacturing facility in the U.S. Moreover, the firm says that is has a solution, at least in part, to bitcoin mining’s carbon footprint problem. The company boasts the largest install base of liquid cooling for data centers around the world, and has been proven to meet the thermal challenges of cloud, high performance computing, and crypto-mining applications.
The Series B investment came from Trane Technologies, and the amount of the funding was not disclosed. LiquidStack said that it will use the capital to accelerate manufacturing, including the opening of a facility in the United States. LiquidStack CEO Joe Capes noted that the investment from Trane Technologies comes “at a time when demand for sustainable liquid cooling technology has never been greater.”
LiquidStack’s two-phase immersion cooling process reduces data center direct and indirect carbon footprint by more than 1,500 tons per megawatt compared to air cooling. The company’s technology can also be used to reduce the amount of water used to power and cool data centers by more than 300 billion liters per year.