New Crypto Bank Launches In The US – CEO’s Remarks And Contrasts With Signature Bank
A new player has emerged in the world of cryptocurrency banking, with a team of former executives from the collapsed Signature Bank at the helm. The establishment of N3XT comes nearly three years after Signature Bank’s downfall in March 2023, which significantly impacted the crypto industry.
Former Signature Bank Leaders Establish N3XT
According to a report by Reuters, the newly founded blockchain-based bank aims to facilitate instant US dollar payments around the clock, led by Scott Shay, who served as the founder and chairman of the Signature Bank. Jeffrey Wallis, the former director of digital assets at Signature, will take on the role of CEO at N3XT.
Per the report, N3XT will operate under a special-purpose bank charter in Wyoming and has decided to avoid typical lending activities, which were at the heart of the collapsed Signature Bank.
“Every dollar of deposits will be backed by cash or short-term U.S. Treasuries,” Wallis explained, noting that the bank will publish its reserve holdings daily.
This sets N3XT apart from its predecessor, Signature Bank, especially given that its reserves will be held with custodial partners, though Wallis did not disclose their names.
Importantly, N3XT will not be insured by the Federal Deposit Insurance Corporation (FDIC) since Wyoming special-purpose banks are not required to obtain such insurance.
The collapse of Signature Bank, along with the failures of Silvergate Bank and Silicon Valley Bank, pointed to a troubling trend among banks with significant uninsured deposits and ties to the cryptocurrency sector. Rising interest rates and a loss of depositor confidence culminated in bank runs that led to their downfall.
Solutions For Crypto Clients
Addressing concerns about the safety of client assets, Wallis reassured potential customers in the crypto industry, stating, “We do not lend against our balance sheet, so clients always have confidence that their capital is available to them and is never at risk.”
He emphasized that the newly established bank is designed to offer a new and “unique banking structure,” ensuring that clients’ liquidity is readily accessible according to their economic needs.
Wallis further distinguished N3XT’s approach to risk management from that of Signature Bank, which was criticized for “poor management” and a focus on “rapid, unrestrained growth” with little attention to risk.
“We are not making any lending decisions with the balance sheet,” Wallis reiterated. “We are keeping our clients’ assets in full liquid form.” N3XT will reportedly focus on catering to crypto clients, many of whom Wallis mentioned are already in the onboarding process.
As of this writing, Bitcoin (BTC), the market’s leading crypto, is trading at $92,834. It has consolidated above the key $90,000 support level for the past few days, sparking new hopes for a potential recovery above $100,000 by the end of the year.
Featured image from DALL-E, chart from TradingView.com
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