New York Financial Regulators Approve Blockchain Payments System

The Department of Financial Services of New York (NYDFS) has authorized a blockchain-based digital platform offered by a local bank, an official NYDFS press release states Dec. 4.

NYDFS superintendent Maria T. Vullo announced today that the department authorized New York-based Signature Bank to offer its digital payment platform Signet in the state. The approved system reportedly uses blockchain technology to allow the bank clients to “transfer ‘Signets’ to make payments with no transaction fees, at any time of the day, year-round.”

The system purportedly allows funds “to be transferred in real-time between two commercial clients of Signature Bank, eliminating any dependence on a third party.” Signet has been subject to a “comprehensive and rigorous review” and needs to comply with “significant regulatory conditions.”

Namely, the “approval includes required conditions to ensure [...] compliance with New York’s strong standards and regulations regarding anti-money laundering (AML), anti-fraud, and consumer protection measures.”

Moreover, Signet balances are eligible for coverage by the Federal Deposit Insurance Corporation (FDIC), of which Signature Bank is a member. This corporation underwrites most private U.S. bank deposits “up to the legal insurable amounts defined.”

Vullo declared that the department is “pleased to strengthen and foster regulated innovation [...] specifically within our state-chartered banking system.” The superintendent stated:

“New York continues to support and help advance innovation through sound state regulation and with products such as Signet...”

According to the press release, Signature bank is a “full-service commercial bank with 30 private client offices throughout the New York metropolitan area,” which currently has $45.87 billion in assets.

This is just the latest development in the growing New York blockchain industry. In November, crypto hardware wallet Ledger opened a New York office to develop its institutional custody offering Ledger Vault.

Coinbase, the highest-volume U.S.-based cryptocurrency exchange, also obtained approval to offer crypto custody services in the state in mid-October.