Uncertainty surrounding the future of Signet, Signature Bridge Bank NA's blockchain payment platform, is causing some of its customers to seek new relationships.
Signet is currently under the receivership of the Federal Deposit Insurance Corp., which says no decision has been made on the future of the platform. Some Signet customers, however, believe that it will be wound down.
"My understanding is it'll be shut down," 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 be retired."
Wolf said he learned about the shutdown via verbal communication from his contacts at Signature Bridge Bank. It 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 operational, and we've continued to use it," an executive at a crypto trading firm who has been a customer of Signet said under the condition of anonymity.
Still, the crypto trading firm will continue to search for a 24/7 payments alternative, even if it is not aware of plans for Signet to close, the executive said.
Another Signet customer, crypto exchange Coinbase Global Inc., paused support for Signet starting March 20 until further notice, according to a Coinbase spokesperson. Coinbase described its reason for taking the action as being "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 on the outcome of Signet," the spokesperson wrote in an email.
Signet was not included in the March 20 announced deal agreement that calls for Flagstar Bank NA, a unit of New York Community Bancorp Inc., to acquire "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 remains under 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 on the roughly $4 billion digital deposit book. The FDIC also still needs to dispose of roughly $60 billion in loans that Flagstar did not buy, which remain in receivership.
Customers seeking alternative solutions
CargoSprint's deposits related to Signet are currently under Flagstar, and the accounts associated with Signet remain active and money can be transferred via the automated clearing house system, Wolf said.
The Peachtree City, Ga.-based provider of digital solutions to the cargo industry started using Signet to process payments for its customers, such as freight forwarders, more than two years ago and was banking with the former Signature Bank in order to use the platform, Wolf said.
Now, CargoSprint has been in contact with Cogent Bank and Customers Bank about their blockchain-enabled payment networks, Wolf added. Both banks use the same technology vendor as the one supporting Signet, Tassat Group Inc.
Cross River Bank has also been an option discussed by some customers, the crypto trading firm executive said.
But for Signet customers, finding alternatives is not easy because few provide the around-the-clock solutions that the Signature platform offers.
May spur buyers' interest
Some see value in Signet and envision it being sold rather than shut down.
Eugene Ludwig, co-managing partner of Canapi Ventures and former US comptroller of the currency, described the platform's internal payment process, which utilizes tokens in the blockchain, as thoughtful and successful.
"It wouldn't surprise me that some entity or individuals would want to buy these assets, because they're valuable," Ludwig said.
