Dec 4 (Reuters) – Former Signature Bank executives are launching a new blockchain-based bank aimed at facilitating instant, round-the-clock payments in U.S. dollars, nearly three years after the collapse of the New York-based bank known for serving its customers in cryptocurrency.
The bank, called N3XT, was founded by Scott Shay, founder and former president of Signature Bank. Jeffrey Wallis, who was previously director of digital assets and Web3 strategy at Signature, will be CEO of N3XT. Reuters first reported the new venture.
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N3XT will operate globally under a Wyoming special purpose banking charter and will not engage in any lending activities.
Every dollar of deposits in N3XT will be backed by cash or short-term U.S. Treasuries, and the company will publish its reserves daily, which sets it apart from Signature, Wallis said. Its reserves will be held with custodian partners, whom it declined to name. Blockchain-based banking will not be insured by the Federal Deposit Insurance Corporation, and special purpose banks in Wyoming are not required to obtain FDIC insurance.
“We don’t lend against our balance sheet, so customers always have the confidence that their capital is available to them, that it is never at risk and that it is always ready to be used according to their economic needs,” Wallis said.
Signature operated a payments network called Signet that allowed its crypto trading clients to make payments 24 hours a day, seven days a week, which Wallis said was an “influential” experience in the creation of N3XT.
“N3XT, in itself, benefits not only from the technology experience that we have and the model experience that we have, but also from thinking about actually creating a new, unique and very different banking structure, where we always make our customers’ liquidity or capital available to them,” Wallis said.
Wallis said N3XT’s risk management standards are not comparable to Signature’s.
“We don’t make any lending decisions based on the balance sheet,” he said. “We…keep our clients’ assets in a fully liquid form.”
N3XT plans to target digital asset customers from the start, many of whom Wallis says have already started the onboarding process.
Reporting by Hannah Lang in New York; edited by Michelle Price and Paul Simao
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