Cheaper and faster BTC payments: Xapo Bank integrates with the Lighting Network
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(Kitco News) - Xapo Bank, a leading Bitcoin (BTC) custodian and licensed private bank, announced that it has partnered with Lightspark, a company focused on building infrastructure for the Lightning Network (LN), to integrate the Bitcoin scaling solution into its banking services.
The Lightning Network is a layer-two (L2) protocol for the Bitcoin network that enables lower transaction costs and faster processing times by conducting transactions off-chain and then recording batches of transaction data on the Bitcoin blockchain. The LN enables scalable payments at millions of transactions per second across the network, the press release said.
With this integration, Xapo users will be able to instantly pay for small purchases of up to $100 at any vendor that accepts Lightning payments and forego the high transaction fee and long confirmation time typically associated with Bitcoin.
Xapo Bank is now the first fully licensed private bank to offer near-instant Bitcoin payments and its ultimate goal is to be the largest Lightning node, expanding the network's use across a host of new users.
"The average transaction confirmation time of one hour combined with potentially large fees during periods of high usage make the Bitcoin network unsuitable for small daily payments such as groceries,” said Seamus Rocca, CEO of Xapo Bank. “By integrating with the hyper-efficient Lightning Network, we are the first bank in the world to streamline this process and allow our members to pay for small purchases with Bitcoin without having to convert to USD first.”
To help attract crypto holders, the bank offers an annual interest rate of 4.1% for US dollars and will soon be offering up to 1% on Bitcoin, divided over the year and paid out daily.
“Against a backdrop of hyperinflation, economic uncertainty and political turmoil, we are entering a world where digital money is ubiquitous, and we need integrations like this that open up access to Bitcoin payments,” Rocca added.
Xapo, which was founded in 2013, was the first institutional holder of Bitcoin, was the first crypto company in the world to obtain a banking license and has a reputation for being one of the most trusted custodians in the crypto industry. This will likely benefit the bank in the months ahead after the Securities and Exchange Commission signaled that it would increase its scrutiny of crypto custodians.
Users of Xapo Bank also maintain full control of their Bitcoin and have the ability to send, receive and hold Bitcoin directly. In order to utilize the Lightning Network to make payments, users will need to hold BTC in the Xapo Bank App, which will allow them to scan and pay an invoice at any merchant that accepts LN payments.
Xapo Bank has set a fixed payment fee of 15 satoshis, which currently costs less than $0.01, in order to protect members from executing transactions with high fees.
"We believe that Bitcoin is the future of money, and we are committed to helping our members navigate this new financial landscape,” said Wences Casares, Chairman at Xapo Bank. “By expanding our services to include instant Bitcoin transfers, we can offer our members better usability and ultimately grow the cryptocurrency that many of our members rely on."
|Cash App users can now send and receive BTC via the Lightning Network|
On Thursday, Coindesk reported that TBD, a division of the FinTech company Block, announced the launch of “c=” (pronounced “c equals”), a new business entity focused on improving liquidity and routing on the Lightning Network.
C= was created to address the issue of failed transactions on the LN that are the result of poor liquidity and inefficient payment routing. The new entity will address this issue by committing Bitcoin to the Lightning Network and building infrastructure to bolster network reliability.
This development for Xapo Bank is a welcomed sight for crypto enthusiasts amid an uptick in bad news for crypto-serving banks. Wednesday, Silvergate Bank (SI) informed regulators that it would be unable to meet the March filing deadline for its 2022 annual financial due to the struggles it has faced following the bear market of 2022. As a result of Silvergate’s struggles, Coinbase announced that it was dropping it as a banking partner, and the price of SI stock fell by 50%.