Signature Bank’s Signet platform was once invaluable to the crypto industry.
Then the bank behind it, Signature, failed, entered into Federal Deposit Insurance Corp. (FDIC) receivership, and was sold over the weekend (March 19) to New York Community Bancorp-owned Flagstar Bank.
Now, according to a Monday (March 20) report by The Wall Street Journal (WSJ), the largest cryptocurrency exchange in the U.S., Coinbase Global, is effectively giving up on the platform — telling clients that it won’t support transactions using the Signet Network until further notice.
For years, the Signet platform provided a critical on-ramp for the crypto industry to the traditional banking system, allowing 24/7/365 real-time payments outside of traditional banking hours and without requiring the use of comparatively restricted payments services like the Federal Reserve’s Fedwire or ACH transfers.
Coinbase first partnered with Signet in October 2022.
As relayed by the WSJ, institutional Coinbase customers who previously relied on Signet for U.S. dollar deposits and withdrawals will no longer be able to transfer funds to each other outside of traditional banking hours.
Coinbase is looking for a new provider while it awaits clarification of Signet’s eventual fate.
Read more: Banking Crisis Contagion Spreads to Crypto
When Flagstar Bank acquired Signature from the FDIC, the lender’s bid did not include Signature’s crypto business. Approximately $4 billion in crypto deposits tied to Signature’s formerly formidable digital banking business are now set to be returned to customers.
“The FDIC will provide these deposits directly to customers whose accounts are associated with the digital banking business,” the agency said in a Sunday (March 19) announcement.
The Signet platform, launched by Signature in 2019 during its attempt to cater to companies in the digital asset industry, is currently under FDIC receivership and remains subject to later arrangement.
Signature Bank only offered the service to its commercial digital asset clients.
As reported by PYMNTS, the shuttering of both Silvergate Bank, which voluntarily liquidated, and Signature Bank, which failed, has made it increasingly difficult for crypto firms and investors in need of instant payments, as well as for stablecoin companies like Circle Financial that relied on Signet’s real-time payment rails to mint and redeem their tokens.
According to the WSJ report, which quoted FinTech company Tassat, which provides the technology behind the platform, Signet was still running and operational Monday (March 20).