In a stormy time for cryptocurrency payments, Seamus Rocca sees clear skies on the horizon — enough to add support for a variety of digital asset options.
"The key word here is to embrace this rather than being scared of it," said Rocca, CEO of Xapo Bank.
The Gibraltar-based Xapo Bank has adopted the Tether (USDT) stablecoin for payments, which it contends will add speed and cut costs for international payments. It's one of several moves Xapo has made in the past few weeks to support crypto payments.
Cryptocurrency is described as being in a "winter" due to a year of high volatility, scuttled projects and bankruptcies. But Xapo contends that its own status as an institution regulated as both a bank and a crypto company, and demand for lower-cost international payments, creates a lane for growth.
"Rather than shutting down the crypto space, which seems to have happened, there is an opportunity here," Rocca said.
Xapo, which was founded in 2014, is regulated by the Gibraltar Financial Services Commission. That regulator supervises both traditional currency and crypto activities.
Xapo already supports the USDC stablecoin for payments, which it launched in March. Tether and USDC are the world's two largest stablecoins, with an $82 billion and $30 billion market cap, respectively, according to
Stablecoins are a type of cryptocurrency that are backed by non-crypto reserves to hedge against crypto's valuation swings. Tether, which in 2021 paid a fine over the viability of the reserves backing the stablecoin, has
"Tether is so liquid that it is relatively inexpensive to trade for any other cryptocurrency," said Aaron McPherson, founder of AFM Consulting. "So if you wanted to spend your crypto and it wasn't already bitcoin, you'd be converting to Tether and then using Tether to convert to bitcoin."
The stablecoin support at Xapo adds to the bank's integration with Bitcoin's Lightning Network in partnership with Lightspark, which went live earlier in May. Lightspark was founded in 2022 by
There has also been trouble elsewhere in the crypto industry over the past year. The
Xapo is relying on its Gibraltar license and eight-year track record of offering crypto services to argue that digital assets are safe for payments, with a market that's expected to expand over time. The market for crypto payment gateways, or firms that process payments in virtual currencies, is currently valued at about $1 billion and is expected to reach $5.4 billion by 2031, according to
Taking advantage of this growth requires support from financial institutions, which can add scale to manage international payments in blockchain or other crypto, said Hadrien Croubois, a smart contracts engineer for OpenZepplin, a blockchain security company.
"An issue is the nature of blockchain; the systems are not salable enough to address the market," Croubois said, adding financial institutions can provide scale to manage settlement costs for blockchain-powered transactions.
Rocca envisions uses for stablecoins such as international payments for e-commerce purchases, P2P transfers and other applications that build off of P2P. Xapo also supports Faster Payments, the U.K. real-time settlement network, enabling near-instant payments for both digital assets and traditional currency.
"If you remember the beginnings of e-commerce, people were afraid about putting their payment information on a website," Rocca said. "If that fear continued, we wouldn't have PayPal or eBay today."
Other firms pursuing blockchain and digital assets to reduce costs for international payments include Ripple, which for years has used the technology that underpins the XRP token to eliminate correspondent banks to manage currency conversions and other tasks for payments involving different currencies.
More recently, Ripple began work with
Though digital assets are already relied on for payments, the opportunity for growth in adoption are as tremendous as the potential benefits that have yet to be realized, said Brendan Berry, head of payment products at Ripple.
"Users want solutions to their problems, not technology in search of a problem. Early digital asset payment applications focused on the technology, like 'sending BTC to anyone', rather than solving real customer problems which for many users are slow, expensive and fragmented payment options," Berry said.
Broader adoption is reliant on easier on-and-off ramps which offer users less complex ways to move their funds between traditional financial systems to the blockchain, and back into traditional currencies, Berry said.
"This will require cooperation between traditional financial institutions and crypto through a shared appreciation that these systems can and must be complementary rather than working against one another," he said.
