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Xapo Bank

Xapo Bank Insights on Cash & Crypto Payment Trends (Q3, 2023 Report)


As the Chief Operating Officer at Xapo Bank, I work closely with Payment Operations, Card Operations and Reconciliation colleagues to produce a monthly Operational Review report. This report analyses payment and transactional activity, which highlight some interesting trends that I’m going to discuss. For example: 

Who is winning the USDC versus USDT stablecoin battle? 

What is the uptake like on using the Lightning Network for BTC payments?

Are crypto payment rails taking market share from traditional payment rails?

It has been an interesting year for Xapo Bank. Over the last 12 months, we have integrated the following payment solutions:

  • USDC (USD Coin): Launched in November 2022
  • BTC Lightning: Unveiled in February 2023
  • Faster Payments for GBP transfers: Rolled out in March 2023
  • USDT (Tether): Introduced in April 2023
  • SEPA for EUR transfers: Making its debut in June 2023
  • ACH for USD transfers: Work in progress and coming soon

Doing so has provided us with an in-depth perspective on emerging trends in cryptocurrency payments and the levels of adaptation versus traditional banking payment rails. In addition to crypto and traditional banking payment rails, Xapo Bank also provides Visa and MasterCard debit cards.

With the Xapo Bank Treasury team now managing approximately 38,931 BTC ($1bn) as of the 31st of August 2023, plus a sizeable fiat (US Dollar, Pounds and Euro) position, we are now firmly established as the largest retail crypto-enabled bank in the world. Our BTC treasury holdings put us in the top crypto rankings in many categories.  

This gives us a lot of data to work with. 

As a business, we have now established ourselves as that vital bridge, connecting conventional financial systems to the crypto market.

The drivers for using Xapo Bank vary depending on where you live. For some members, we help them achieve a greater level of economic equality by protecting their savings and the purchasing power of their earnings from the impact of regional economic fluctuations.  

We offer members the levels of protection and safeguarding that they are accustomed to when entrusting their assets to a bank, such as with a deposit guarantee scheme for eligible fiat deposits and regulatory oversight.  

For those who want to protect the purchasing power of their assets through separation of state and money, we offer BTC savings solutions, with the very highest levels of security, while still having immediate access to fiat and crypto payment rails.  Have a look at the security page that explains in detail how we protect your Bitcoins. 

Our customer BTC holdings are fully segregated and are not exposed to any form of trading, lending or leveraged activity. We now have 10 years of experience protecting your BTC, having evolved from a Bitcoin wallet to a custodian, to an e-money institution, and now a fully regulated bank, while developing a reputation along the way of being the ‘Fort Knox of Crypto’.

We are also fully audited by a Big Four firm (KPMG), with PWC providing internal audit services.

As for members who have adopted stablecoins for payments, we offer them peace of mind. Stablecoins received are automatically converted to USD and held in Xapo Bank so that your assets are protected against de-pegging. Once converted to USD, our members get €100,000 of deposit protection under a statutory deposit guarantee scheme. That is a big win-win for our members.

Let's get into the payment trends we are seeing from analysing member behaviour in Xapo Bank.  Rather than looking at payment volumes, I will focus on the relative weighting in the different types of transactions that our members are executing.

First and foremost, debit card transactions represent the lion's share of transactional activity on our platform, which is driven by small and frequent payments.

Debit card transactions have been holding steady at around 78% of the overall volume of payment transactions.   

If we strip out debit card transactions, we get down into the more interesting trends in crypto versus fiat market share:

Within 12 months, it is remarkable to observe the growth in crypto payment transactions, which now represent 7.66% of the overall payment transactions, competing neck and neck with fiat at 7.65%. It will be interesting to observe how well demand for USD Stablecoins holds up when we re-introduce ACH rails for USD payments in the coming months.

So who is winning the stablecoin wars? Let's dive into that:

We launched USDC payment rails about a year ago, followed by BTC on Lightning and then USDT (Tether). USDC got off to a strong start, but month on month, it has been losing transaction share to USDT on our platform.  This slightly surprises me as there is typically less volatility in the USDC price versus the USDT price. That being said, the price volatility is typically low, with the USDC price having moved 0.0008 and the USDT price having moved 0.0014 over the last week at the time of preparing this.

As for BTC Lightning payments, there has been limited uptake. This is possibly down to a lack of nodes, slow merchant adaptation, liquidity, customer awareness, or simply that BTC is seen as a store of wealth, which is expected to increase in value over time. Contrary to this, traditional currencies like Dollars, Euros, Pounds, and related stablecoins are expected to lose purchasing power over time.

It is not only members who are adopting stablecoins. Over recent months Xapo Bank has started a trial with Visa to clear and settle payments using USDC. From a usability perspective, it is a compelling proposition, as you can send a payment to anyone, anywhere, anytime, instantly, for very little cost.  It tears down closed financial systems that constrain competition and, in doing so, creates the foundation for the next generation of financial services.

In the words of our founder and chairman, Wences Casares, “We envision a world in which all seven billion people on earth use digital money every day. We envision a world in which digital money is more common, more useful and more secure than paper money. In that world, Xapo will be the best way to protect and grow your savings, to transact in an increasingly global and international world and to take full advantage of the benefits that Bitcoin and crypto innovations bring to the world.

With that in mind, what stablecoins are you using? What are your thoughts on flatcoins? I would love to hear your perspective so that we can work it into our narrative. So tell me what you want, what you really, really want?

[email protected].


This article is for general information purposes only and is not intended to constitute legal or other professional advice or a recommendation of any kind whatsoever and should not be relied upon or treated as a substitute for specific advice relevant to particular circumstances. We make no warranties, representations or undertakings about any of the content of this article (including, without limitation, as to the quality, accuracy, completeness or fitness for any particular purpose of such content), or any content of any other material referred to or accessed by hyperlinks through this article. We make no representations, warranties or guarantees, whether express or implied, that the content on our site is accurate, complete or up-to-date.

Eligible fiat deposits are protected by the Gibraltar Deposit Guarantee Scheme up to a maximum of the US Dollar equivalent of EUR 100,000 (subject to prevailing exchange rates on the compensation date).

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Bitcoin, US Dollars, and stablecoins