Fate of Signature’s Blockchain Platform Unclear; customers seeking alternatives

Uncertainty surrounding the future of Signet, Signature Bridge Bank NA’s blockchain payments platform, is prompting some of its customers to seek new relationships.

The token is currently under receivership by the Federal Deposit Insurance Corp., which says no decision has been made on the future of the platform. However, some Signet customers believe that it will be discontinued.

“I understand it will be closed,” said Josh Wolf, CEO of CargoSprint LLC, a Signet customer. “Maybe that decision will be reversed. But the latest information I have is that Signet from the former Signature Bank will eventually retire.”

Wolf said he learned of the closure via verbal communication from his contacts at Signature Bridge Bank. That prompted CargoSprint to seek other banks that operate blockchain-enabled payment networks similar to Signet, Wolf said in an interview.

However, not all Signet customers have received the same message from Signature Bridge Bank.

“We have not received any notice from Signature’s bridge bank about an impending shutdown of Signet. Signet is still operating and we have continued to use it,” said an executive at a crypto trading firm that has been a client of Signet, speaking on condition of anonymity.

Still, the crypto trading firm will continue to search for a 24/7 payment option, although it is not aware of plans for Signet to close, the executive said.

Another Signet customer, crypto exchange Coinbase Global Inc., suspended support for Signet effective March 20 until further notice, according to a Coinbase spokesperson. Coinbase described the reason for taking the action as “proactive”.

“Users who relied on Signet for USD deposits or withdrawals will have no 24/7 real-time payment network outside of traditional banking hours while we look for a new technology provider or if and when more clear information is released about the outcome of Signet,” the spokesperson wrote in an e-mail.

The signet was not included in the announced agreement on March 20 that requires Flagstar Bank NA, a unit of New York Community Bancorp Inc., to buy “substantially all deposits and certain loan portfolios” of Signature Bridge Bank from the Federal Deposit Insurance Corp.

An FDIC spokesperson wrote in an email that Signet is still in receivership, and the FDIC did not comment on potential outcomes for Signet.

The FDIC said it will send deposits related to Signature’s digital asset banking business directly back to customers since Flagstar did not bid for the roughly $4 billion digital deposit book. The The FDIC also still needs to dispose of about $60 billion in loans that Flagstar didn’t buy, which are still in receivership.

Customers looking for alternative solutions

CargoSprint’s Deposits related to Signet are currently under Flagstar, and the accounts related to Signet remain active and funds can be transferred through the automated clearinghouse system, Wolf said.

The Peachtree City, Ga.-based provider of digital solutions to the freight industry began using Signet to process payments for its customers, such as freight forwarders, more than two years ago and banked with the former Signature Bank to use the platform, Wolf said.

Now CargoSprint has been in contact with Cogent Bank and Customers Bank about their blockchain-enabled payment network, Wolf added. Both banks use the same technology provider as the one supporting Signet, Tassat Group Inc.

Cross River Bank has also been an option discussed by some clients, the head of the crypto trading firm said.

But for Signet customers, finding alternatives is not easy because few offer the 24/7 solutions that the Signature platform offers.

Can stimulate buyers’ interest

Some see value in Signet and envision it being sold rather than closed down.

Eugene Ludwig, co-managing partner of Canapi Ventures and former US Comptroller of the Currency, described the platform’s internal payment process, which uses tokens in the blockchain, as well thought out and successful.

“It wouldn’t surprise me that some entities or individuals would want to buy these assets, because they are valuable,” Ludwig said.