Ex-Signature Bank Leaders Launch N3XT, a Blockchain-Powered Narrow Bank
Former executives from the defunct Signature Bank have launched N3XT, a new full-reserve bank leveraging blockchain technology to offer instant, programmable U.S. dollar payments. Operating under a Wyoming Special Purpose Depository Institution (SPDI) charter, N3XT aims to provide institutional clients with automated transaction capabilities through smart contracts.
Key Takeaways
- Former Signature Bank executives, including CEO Jeffrey Wallis and founder Scott Shay, are behind the new venture.
- N3XT is a "narrow bank" that does not lend deposits, holding them one-to-one with cash or short-term U.S. Treasuries.
- The bank is backed by prominent venture capital firms such as Paradigm and Winklevoss Capital, having raised $72 million.
- N3XT seeks to replicate and enhance the real-time payment services previously offered by Signature Bank's Signet platform.
The Genesis of N3XT
Following the closure of Signature Bank in March 2023, a group of its former leaders has resurfaced with N3XT, a novel banking initiative. The bank's core offering is a blockchain-powered system designed for instant payment settlements and the automation of business transactions via smart contracts. This move aims to fill a void left by Signature Bank, which was known for its crypto-friendly services and its real-time payments platform, Signet.
A Narrow Bank Model
N3XT operates on a "narrow bank" principle, meaning it does not engage in lending activities with customer deposits. Instead, every dollar held by the bank is backed by an equivalent amount of cash or short-term U.S. Treasuries, with daily disclosures ensuring transparency. This model contrasts with traditional banks that lend out a significant portion of their deposits.
Backing and Funding
The new venture has secured substantial backing from the venture capital community. Investors include Paradigm, HACK VC, and Winklevoss Capital, the firm founded by Gemini exchange co-founders Tyler and Cameron Winklevoss. According to Crunchbase data, N3XT has successfully raised $72 million across three funding rounds, with the most recent occurring in October.
Vision and Services
Led by CEO Jeffrey Wallis, formerly Director of Digital Asset Strategy at Signature Bank, and founder Scott Shay, who created Signet, N3XT aims to provide a programmable and compliant payment solution. "We're applying crypto innovations to banking to deliver instant, programmable payments for institutional clients," stated Wallis. "Our platform gives businesses the control and reliability they need in a 24/7 global economy." The bank has already attracted clients from sectors including cryptocurrency, shipping, logistics, and foreign exchange, reporting a strong pipeline of future customers.