Cementing the blockchain technology in the banking industry, state-chartered Signature Bank in New York takes a step forward and receives approval from the Department of Financial Services of New York (NYDFS) to authorize a blockchain-based digital platform. The innovation, called Signet payment system, will allow funds to be transferred in real-time between two commercial clients of Signature Bank without middlemen, third-party institutions, and transaction fees any time of the day. This makes both blockchain and Bitcoin–the first to introduce the technology–more relevant across mainstream industries.
Announcing the approval is Maria T. Vullo, NYDFS Superintendent. In a press release, she stated: “DFS is pleased to strengthen and foster regulated innovation in New York’s burgeoning financial technology sector, specifically within our state-chartered banking system. New York continues to support and help advance innovation through sound state regulation and with products such as Signet, which provides lower-cost ways for businesses to efficiently make payments.”
Terms and Conditions
The approval of the state’s highest financial institution is a notable achievement for the blockchain technology and its users. However, it still includes a required set of terms and conditions to maintain the effectiveness of the procedure and to address several risks. First and foremost, Signet must follow New York’s strong standards and regulations regarding anti-money laundering, anti-fraud, and consumer protection measures—or specifically, the following:
- Implement, monitor and update effective risk-based controls and appropriate BSA/AML and OFAC controls to prevent money laundering or terrorist financing.
- Implement,monitor and update effective risk-based controls to prevent and respond to any potential or actual wrongful use of virtual currency, including but not limited to its use in illegal activity, market manipulation, or other similar misconduct, as required by DFS’s February 7, 2018, “Guidance on Prevention of Market Manipulation and Other Wrongful Activity”.
- Comply with DFS’s transaction monitoring and cybersecurity regulations.
- Maintain policies and procedures for consumer protection and to promptly address and resolve customer complaints.
- About Signature Bank
The developer of Signet that captured the attention of NYDFS, Signature Bank, is a state chartered full-service commercial bank handling 30 private clients throughout the metropolitan area. The bank offers business and personal banking products and services, and it’s currently serving Manhattan, Brooklyn, Westchester, Long Island, Queens, the Bronx, Staten Island, and Connecticut while boasting off its $45.87 billion assets.