Signature Bank is launching a payments platform for its institutional clients to be powered by permissioned version Ethereum blockchain. The initiative known as the Signet Platform allows clients with Signature Bank to move funds in 30 seconds, 24 hours daily, seven days a week converting USD to Ethereum ERC-20. While this initiative is limited to only Signature customers, it is part of a move to the commercial bank connect directly to third parties without an intermediary.
Blockchains Are Now Adopted to Simplify Office Workflows in A Number of Industries
Originally popularized for adioting bitcoin without seeing the need of banks, blockchains are now pursued as a way of simplifying several middle and back-office workflows in the banking sector and other industries. Different from other Ether tokens that also comply with the ERC-20 standard, Signature Bank’s signets, are designed to work only on the bank’s Signet Platform. However, trueDigitital in a statement indicated that this is the first step in a bid to add other currencies and pairs. Ethereum (ETH) Price Today – ETH / USD
Signet Platform to Launch on January 1 Next Year
The Signet Platform will be open to commercial clients with Signature Bank from January 1, 2019. After the launch time the transactions will initially be free, but they will also be a minimum balance requirement of $250,000. All deposits held in the Signet Platform will be eligible for FDIC insurance, which will measure up to the legal insurable sums defined by the FDIC. Since the platform will be restricted to only Signature Bank customers, all users have to pass the anti-money-laundering policy stipulated by the bank as well as the KYC (know-your-customer) compliance.
Signature Bank was launched in May 2001. It has generated $155.4 million in net income for Q3 of 2018 and now manages up to $45 billion in assets.
Signet Has Received Regulatory Approval
Also announced today, Signet Platform has received approval from the NY State Department of Financial Services. This makes it the first bank to get regulatory permission to implement Blockchain technology in this capacity. Although the service will be free when it is launched, the company is looking into how they can monetize the service.
The launch of Signet is not the first time that the trueDigital Holdings founder made headlines. Before going into a partnership with Signature Bank, the founder of trueDigital Sunil Hirani launched Digital Asset Holdings, a startup that has raised $107 million in venture capital. It is known for winning a contract to help the ASX (Australian Securities Exchange) replatform its CHESS register for securities.
Additionally, Swift has been exploring the Blockchain initiative, though it originally deemed the technology as not ready for the heavy volumes their workload needs. There is more competition coming from XRP, a venture-backed network using its proprietary distributed ledger that is similar to the permissioned version of Ether. While XRP is designed to leverage its XRP digital currency in order to increase liquidity, Signet isn’t interested in leveraging crypto directly any time soon.
Moving forward, banks are more likely provide a similar intra-bank payment solution that can streamline or simplify back- and middle-office workflows, before connecting directly to each other.