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The commercial bank of New York has created a payment solution that is powered by an authorized version of the Ethereum blockchain.
Signature Bank, a full-service commercial bank based in New York, has partnered with trueDigital Holdings, LLC, a global financial technology company based in New York, to launch a new digital payment platform.
The new platform is dubbed "Signet" and will allow real-time payments for the commercial and asset management clients of the bank.
The platform leverages an authorized version of the Ethereum blockchain to allow institutional clients to make payments in US dollars 24 hours a day, 7 days a week, 365 days a year.
The Signature Bank generated net income of $ 155.4 million for the third quarter of 2018 and currently manages assets of $ 45 billion.
Problems with the currently used systems
Currently banks use the Swift interbank platform or the Automated Clearing House (ACH) network for cross-border credit transfers. These systems take around 3-4 business days to process payments and are generally not available on weekends.
The Signet platform allows service users to transfer funds in 30 seconds by converting US dollars into ERC-20 tokens. However, only bank customers can use the service at the moment. In the future, the bank may be able to connect to other financial institutions that adopt the system without the need for an intermediary.
The co-founder and CEO of the bank signing DePaolo said:
We have to do it, otherwise we will not exist. If you are not involved in blockchain, in five years, you will not be around like a bank.
Solution design and launch details
Digitized US dollars called Signets are designed to work only on the Signet platform and not interact with other platforms or applications created on the Ethereum blockchain.
According to the announcement on the website of trueDigital, the company plans to launch additional currencies and coupled transactions at the start of 2019.
"This will significantly reduce costs, counterparty risk and settlement times," said Sunil Hirani, founder and CEO of trueDigital.
The Signet platform will be ready to be used by the bank's commercial customers on January 1, 2019 at 00:01 ET. Only customers who have a minimum balance of $ 250,000 will be able to use the service. Initially, transactions are reported as having no transfer fee.
Customer funds on the Signet platform will be insured by the FDIC, up to the agreed permitted amounts. Platform users must comply with the bank's anti-money laundering and know-your-money requirements.
The platform was approved by the New York State Department of Financial Services.
Maria T. Vullo, Superintendent at the Department of Financial Services, states:
New York continues to support and help advance innovation through healthy state regulation. And with products like Signet, which offer companies more economical ways to make payments efficiently.
What are your thoughts on this development? Let us know in the comments below.
Images courtesy of Shutterstock.
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