NY-Based Signature Bank Awarded BitLicense For New Digital Payments Platform ‘Signet’
New York’s Department of Financial Services (NYFDS) has granted regulatory approval to a chartered bank in the state, allowing it to offer crypto-related services via a new cryptocurrency payment platform.
In a press release published on December 4, 2018, the NYDFS, through its financial services superintendent Maria T. Vullo, announced that it had authorized Signature Bank to offer financial services using a digital payment platform called Signet.
The approval means that the bank’s clients can now make payments via Signet, whose system leverages a proprietary blockchain to allow clients send or receive money by transferring ‘Signets.’
With this technology, the bank’s commercial clients will be able to make payments anytime, all-year-round, and without incurring any transaction fees. Signets can be considered as a new private stablecoin.
The Signet system, ostensibly, allows for the real-time transfer of funds “between two commercial clients” of the New York-based bank. Notable is the point that the payment platform helps the transacting to eliminate dependence on a third party service provider (except for itself).
The press release notes that funds deposited in ‘signets’ and held within the digital system “are eligible for FDIC insurance.” The Federal Deposit Insurance Corporation underwrites bank deposits for a majority of private banks.
The FDS has said that prior to the approval, regulators conducted a “comprehensive and rigorous review” of the bank’s application and, going forward, the financial provider must ensure its platform complies with all regulatory requirements.
Signature Bank is also expected to comply with the state’s “transaction monitoring and cybersecurity regulations.”
These measures, which are intended to protect consumers and markets in New York, including ensuring compliance with NYDFS’ stringent regulations on anti-money laundering (AML) and anti-fraud laws
Superintendent Vullo noted that the DFS was happy “to strengthen and foster regulated innovation” in New York, with products like Signet adding to the state’s “burgeoning financial technology sector.”
Joseph J. DePaolo, president and CEO at Signature Bank noted that the approval was an indication that DFS had a thorough understanding of the financial technology space and “how it impacts the future of financial markets.”
Signature Bank, which has over $46 billion in assets, has operated as a full-service commercial bank in New York for many years.
The bank currently has 30 private client offices located in several locations in the New York metropolitan area, including in Brooklyn, Manhattan, Long Island, and the Bronx.
New York’s financial services regulator has since 2015 been issuing approval for any business that wishes to operate as a money transmitter or offer crypto-related services.
The regulator has issued its BitLicense to a number of firms, and crypto exchanges, including Coinbase, Circle, Xapo, and bitFlyer. Others are bitcoin payment processor BitPay and recently, Coinsource, a bitcoin ATM provider.
It has also allowed Genesis Global Trading, XRP II, the Winklevoss’ Gemini Trust Company and Paxos.
Signature Bank is, therefore, the latest in a growing number of blockchain-based companies to launch their businesses or services in New York. That includes wallet provider Ledger which opened an office in the state to spearhead institutional adoption of its custody solution Ledger Vault.
(Source: NY Department Of Financial Services)
This is not investment advice. Cryptocurrencies are highly volatile assets and are very risky investments. Do your research and consult an investment professional before investing. Never invest more than you can afford to lose. Never borrow money to invest in cryptocurrencies.