In March, Signature Bank became the third largest US bank failure. Angus Mordant-Getty Images
Before it failed in mid-March, New York-based Signet gained a reputation as a crypto-friendly bank, thanks in large part to its groundbreaking Signet real-time payments platform. With Signet, companies can process transactions outside of business hours, making it an essential tool for core crypto functions such as minting and redeeming stablecoins.
Many in the crypto industry have lamented Signet’s exit—the FDIC is trying to find a separate buyer barring its successful sale of Signet—which will mark the end of 24/7 crypto banking until a new solution emerges.
While Signet has become a major focus of discussion around “Operation Choke Point 2.0,” the popular theory that US regulators are trying to de-bank the crypto industry, the lesser-known firm that created the platform for Signet: fintech firm Tassat.
Signet was a white-label version of TassatPay, a private, blockchain-based solution currently in use at five other banks, including Cogent Bank, Customers Bank, and Western Alliance. Despite demand for Signet among crypto firms, Tasat CEO Kevin Greene said fate No other clients have expressed interest in using TassatPay to settle crypto payments, nor have any new banks approached Tassat about developing a new version of Signet.
Greene said Tassat has a deck of use cases for TassatPay, which includes private equity capital calls from payroll processing, but that doesn’t include cryptocurrency trading. “We’re empathetic — we know that’s where all the sex appeal is,” she said fate“But it’s really a distraction for us.”
24/7 payments
Although Bitcoin creator Satoshi Nakamoto initially conceived of blockchain with the ideal of decentralization, Tasat has revived the technology to be centrally controlled through a permissioned, proof-of-authority-based model—a system that the company claims is more secure and efficient for clients. With TassatPay, banks can take the best of blockchain—such as the ability to settle payments at any time without human interaction—but oversee the process themselves.
While Signature was arguably the highest-profile Tasat client, thanks to Signet, Green said cryptocurrency settlements were far from the fastest-growing use of the technology, with other clients using it for shipping and logistics, hospital reimbursement and commercial construction.
According to Tassat data, the company has made $500 billion in real-time payments by 2022 across its various clients—a total that now exceeds $1 trillion. In October, Tassat also launched a new product, the Digital Interbank Network, which allows banks to use TassatPay to process payments between each other, completing more than $800 million in transactions in its first three official days of operation. Signature did not participate in the network.
Green said banks other than Signature had previously inquired about using TassatPay for crypto, but after Signature’s failure, despite the sudden lack of 24/7 banking options for crypto firms that rely on technology through Signet and SEN, Silvergate’s non- Payment processor Tassat, which collapsed in March.
“It didn’t end well for Signature Bank, so that might make some people a little cautious around it,” Green said.
Although the Federal Reserve is developing its own instant payment service called FedNow, which it recently announced will launch in July, Tassat remains the leading provider. Given the crisis for small and medium-sized banks, Green said their focus should be on incorporating technology that allows them to challenge larger banks.
“That’s what’s going to save them,” he said fate. “Without that, they’re going to struggle.”