The developer of Signature Bank’s 24/7 payment system calls crypto “a distraction”
In March, Signature Bank became the third largest US bank failure. Angus Mordant—Getty Images
Before its failure in mid-March, New York-based Signature had built a reputation as a crypto-friendly bank, thanks in large part to its pioneering Signet real-time payments platform. With Signet, companies could process transactions outside of business hours, making it an important tool for key crypto functions such as minting and redeeming stablecoins.
Many in the crypto industry lamented Signet’s departure – the FDIC is reportedly trying to find a separate buyer apart from the successful sale of Signature – which will mark the end of 24/7 crypto banking until a new solution emerges.
Although Signet has become a major focus of discussions surrounding “Operation Chokepoint 2.0,” the popular theory that US regulators are trying to de-bank the crypto industry, less well known is the company that developed the platform for Signature: fintech firm Tassat.
Signet was a white-label version of TassatPay, a private, blockchain-based solution currently in operation at five other banks, including Cogent Bank, Customers Bank and Western Alliance. Despite Signet’s demand among crypto firms, Tassat CEO Kevin Greene said Fortune that no other customers have expressed an interest in using TassatPay for crypto payment settlement, nor have any new banks approached Tassat about developing a new version of Signet.
Greene said Tassat has a variety of use cases for TassatPay, ranging from payroll processing to private equity capital calls, but cryptocurrency trading is not included. “We’re sympathetic – we know that’s where all the sex appeal is,” he said Fortune, “but it’s really a distraction for us.”
24/7 payments
While Bitcoin creator Satoshi Nakamoto originally conceived blockchains with the ideal of decentralization, Tassat repurposed the technology to become centralized through a permissioned, proof-of-authority-based model — a system the company claims is safer and more efficient for clients. With TassatPay, banks can take the best of blockchains – namely the ability to settle payments at any time without human interaction – but monitor the process themselves.
Although Signature was arguably the highest-profile Tassat client, thanks to Signet, Greene said cryptocurrency settlements were far from the fastest-growing use case for the technology, with other clients using it for shipping and logistics, hospital reimbursements and commercial construction.
According to Tassat data, the company executed over $500 billion in real-time payments in 2022 across its various clients – a figure that has now passed $1 trillion in total. In October, Tassat also launched a new product, the Digital Interbank Network, which allowed banks using TassatPay to process payments between each other, completing over $800 million in transactions in the first three official days of operations. Signature did not participate in the network.
Greene said banks other than Signature had previously inquired about using TassatPay for crypto, but none have approached Tassat recently, even after Signature’s failure, despite the sudden lack of 24/7 banking options for crypto firms, which have relied on the technology through the Signet and the Signet. SEN, the non-Tassat payment processor for Silvergate, which collapsed in March.
“It didn’t end well for Signature Bank, so that might cause some people to be a little cautious about it,” Greene 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 facing small and medium-sized banks, Greene said their focus should be on incorporating technology that allows them to challenge the larger banks.
“That’s what’s going to save them,” he said Fortune. “Without that, they’re going to struggle.”
