Signature Bank logo displayed on a smartphone.
Developed in partnership with trueDigital Holdings in New York, the Signet Platform lets Signature Bank clients move money in 30 seconds, 24-hours a day, seven days a week by converting U.S. dollars into tokens compliant with ethereum’s ERC-20 standard.
Traditional corporate payments using the Swift interbank platform or the Automated Clearing House (ACH) network can take as long as three days and are generally unavailable during the weekend, frequently resulting in lost business when opportunities require more swift reactions.
Signature Bank cofounder and CEO sees the adoption of the private version of ethereum as a case of disrupt or be disrupted.
Originally popularized for powering the bitcoin cryptocurrency without the need of banks, blockchains and other distributed ledgers are now being pursued as a way to simplify a number of middle- and back-office workflows in banking and other industries.
However, a statement provided to Forbes by trueDigitital indicated this is just the first step to adding other currencies and pairs. “This will significantly reduce costs, counterparty risk and settlement times," said trueDigital founder and CEO Sunil Hirani in a statement.
The Signet Platform will open to commercial clients of Signature Bank on January 1, 2019 at 12:01 a.m. ET. At the time of launch the transactions will be free, but they also require a minimum balance of $250,000.
Launched in May 2001, Signature Bank generated $155.4 million net income for the 2018 third quarter and now manages $45 billion in assets.
Also announced today, the Signet Platform has been approved by the New York State Department of Financial Services, making it the first bank to receive regulatory permission to use blockchain in this capacity.
While the service is free at the time of launch, DePaolo said he wasn’t sharing plans for how they might monetize the service in the future.
The launch of Signet isn’t the first time the founder of little-known trueDigital Holdings made headlines. Prior to partnering with Signature Bank, trueDigital founder Sunil Hirani founded Digital Asset Holdings, which has raised $107 million venture capital, and is best known for winning the contract to help the Australian Securities Exchange (ASX) replatform its CHESS electronic-book-entry register for securities.
“The launch of Signet will address an obvious need that diverse ecosystems have for exchanging funds repeatedly with the same counterparty,” said Hirani, who faces tough competition in the space. Earlier this year Hirani filed a lawsuit that alleges 11 banks conspired to boycott his trueEX interest rate swaps platform.
In fact, Swift itself has also been exploring blockchain, though it deemed the technology not ready for the high volumes their workload requires. Other competition is also coming from Ripple, a venture-backed startup using its own proprietary distributed ledger similar to a permissioned version of ethereum.
Going forward, DePaolo believes that other banks will likely offer similar intra-bank payments solutions that streamline back- and middle-office workflows, and eventually connect directly to each other.
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