Today, Signature Bank unveiled a proprietary digital payments platform for its commercial clients, according to a statement released by the bank. The platform, called Signet, is designed to allow Signature Bank’s commercial clients to make real-time payments in U.S. dollars, every hour of the year.
“The ability to transmit funds between approved, fully vetted commercial clients of the bank at all times is very valuable, especially in light of the increasing speed and frequency at which they conduct their business,” said Joseph J. DePaolo, President and Chief Executive Officer at Signature Bank. “Signature Bank has made a commitment to invest in its technology infrastructure, and the Signet Platform is indicative of this investment,”
This commitment by a bank to embrace technology is consistent with other banks of late. Chase and PNC have partnered with OnDeck’s ODX to streamline their online lending processes and other banks have partnered with fintechs recently as well.
“The partnership between trueDigital and Signature Bank will quickly prove to be extremely beneficial and revolutionary for clients globally as they will now be afforded the opportunity to make instantaneous USD payments to one another in real-time at no cost per transaction,” said Sunil Hirani, Founder of trueDigital.
The new Signet platform uses blockchain technology and can be used to make payments across a wide variety of industries, initially focusing on power, shipping, real estate, auto and digital assets where costs, delays, operational risks and counter-party risks are significant, according to a trueDigital statement.
The platform is not designed for a very small company as transactions made on the Signet platform require a minimum account balance of $250,000. Also, the companies exchanging money must both have an account at Signature Bank.
The New York State Department of Financial Services has approved the Signet platform and deposits held on the platform are eligible for FDIC insurance, up to the legal insurable amounts defined by the FDIC.
Signature Bank is a New York-based full-service commercial bank with 30 private client offices throughout the New York metropolitan area. This year, the bank opened a full-service private client banking office in San Francisco. Signature Bank’s specialty finance subsidiary, Signature Financial, LLC, provides equipment finance and leasing. trueDigital is a New York-based fintech company that provides solutions to financial markets by utilizing blockchain-based technologies.
Bitcoin fell about five percent yesterday to below $7,000 after Business Insider published a story saying that Goldman Sachs is dropping its plan to open a trading desk dedicated to cryptocurrencies. The Business Insider story made this claim anonymously, citing people familiar with matter.
Update: Goldman Sachs CFO Martin Chavez discounted the Business Insider report on Thursday, calling it “fake news” at the TechCrunch Disrupt Conference in San Francisco.
“I never thought I would hear myself use this term but I really have to describe that news as fake news,” Chavez said on stage at the conference.
Chavez said Goldman is working on a type of derivative for bitcoin because “clients want it,” according to CNBC.
“The next stage of the exploration is what we call non-deliverable forwards, these are over the counter derivatives, they’re settled in U.S. dollars and the reference price is the bitcoin-U.S. dollar price established by a set of exchanges,” Chavez said.
The value of Bitcoin has continued to drop today, losing $1,000 in a 24 hour period. It is now at $6,409.30, according to CoinDesk.
A May 2018 story in Fortune indicated that Goldman Sachs had plans to open a Bitcoin-trading business in June of this year. That was postponed and it now seems that these plans have been shelved indefinitely. The sources in the Business Insider story said that Goldman Sachs sees the regulatory environment as ambiguous regarding cryptocurrencies.
In a tweet from the bank’s CEO Lloyd Blankfein last October, he wrote, “still thinking about bitcoin.” And he later said, according to CNBC, “No conclusion – not endorsing/rejecting. Know that folks also were skeptical when paper money displaced gold.” It seems that there is still no conclusion.
When asked if the assertions in the Business Insider story are true – that plans for a cryptocurrency desk have been scrapped – Goldman Sachs representative Michael DuVally responded with the following comment: “In response to client interest in various digital products, we are exploring how best to serve them in the space. At this point, we have not reached a conclusion on the scope of our digital asset offering.”
Square’s small business funding arm, Square Capital, made over 50,000 business loans for a total of $339 million in Q1, according to the company’s latest earnings report. That figure is a 35% increase year-over-year and puts them on pace to break last year’s $1.177B total. OnDeck, by comparison, who is arguably their top rival, made $2.11B in business loans last year.
“[..] they just don’t have another way to get access to that sort of capital. And when they get it, they invest in their business,” Square CFO Sarah Friar, said of their merchants during the earnings call. “They’re buying inventory, they’re hiring new employees, they may be taking any lease hold and opening that second location. And when they do that, their business grows and hence our business grows. So, we still think we have a unique product that no one else can really follow us into.”
Square also earned $34 million in revenue from bitcoin, thanks to the Cash App they launched in January that allows users to buy and sell bitcoin. Bitcoin was mentioned an eye-opening 37 times in their quarterly shareholder letter, while their loan program is only referenced 7 times.
Overall, the company brought in $669 million in revenue and recorded a $24 million loss. They also entered into an agreement to buy Weebly, a company that helps people build professional websites and online stores.
“Weebly will expand Square’s customer base globally and add a new recurring revenue stream. Weebly has millions of customers and more than 625,000 paid subscribers,” the company wrote.
“Under this new policy, the advertisement of Initial Coin Offerings (ICOs) and token sales will be prohibited globally,” a Twitter spokesperson told CNBC.
As with Facebook and Google, the rationale behind the ban is to protect users from fraud related to cryptocurrencies.
“We are committed to ensuring the safety of the Twitter community. As such, we have added [this] new policy for Twitter Ads relating to cryptocurrency,” the spokesperson said.
Ironically though, Twitter CEO Jack Dorsey has praised Bitcoin and said as recently as last Wednesday, to The Times UK:
“The world ultimately will have a single currency. The Internet will have a single currency. I personally believe that it will be Bitcoin, probably over ten years, but it could go faster.”
Google and Facebook also have complex relationships with cryptocurrencies.
According to Cointelegraph, even though Google banned cryptocurrency ads, it owns a handful of companies that rely heavily on the use of cryptocurrencies, like Storj, which runs on the company’s native SJCX cryptocurrency, or Veem, which uses Bitcoin for its payments.
Meanwhile, in a post from January 4 of this year, Facebook founder Mark Zuckerberg wrote of cryptocurrencies as a promising counter balance to an increasing centralization of power among technology behemoths:
“There are important counter-trends to [centralization] — like encryption and cryptocurrency — that take power from centralized systems and put it back into people’s hands. But they come with the risk of being harder to control. I’m interested to go deeper and study the positive and negative aspects of these technologies, and how best to use them in our services.”
Facebook announced yesterday that it had banned all ads promoting Bitcoin or anything related to cryptocurrencies.
The new item on the Prohibited Content list for Facebook ads reads: “Ads must not promote financial products and services that are frequently associated with misleading or deceptive promotional practices, such as binary options, initial coin offerings, or cryptocurrency.”
In light of the fact that Bitcoin rose in value by about 1600% in 2017, cryptocurrency has received enormous mainstream interest in recent months.
At a memorial last week for the former owner of The Strand bookstore in Manhattan, actor Fran Lebowitz finished her remarks by saying “And can someone tell me what Bitcoin is?” Lucky for her, the well-known economist, Paul Krugman, happened to be speaking next and answered the question.
Right as momentum is building for cryptocurrencies, Facebook’s action warns the public that digital currencies are still shady.
Aside from the inherent mystery of cryptocurrency – that users are not identifiable – recent revelations have revealed that a cryptocurrency called Tether may be artificially sustaining Bitcoin. If this is true, it could have a devastating effect on the value of the most traded cryptocurrency.
In an explanation of Facebook’s new policy, the social media giant’s product management director, Rob Leathern, wrote: “This policy is part of an ongoing effort to improve the integrity and security of our ads, and to make it harder for scammers to profit from a presence on Facebook.”
Leathern wrote that the new policy is “intentionally broad” so that Facebook can better identify deceptive practices.
Is Facebook doing the right thing?
James Altucher, an investor and finance writer who has invested in cryptocurrencies since 2013 and sells “Crypto Trader,” an educational package for $2,000, thinks so.
“Ninety-nine percent of cryptocurrencies are total scams,” Altucher has written on his blog.
“I think this is a very good move for Facebook,” he told Recode.net.
Facebook and Snapchat might be the last things that employees are being distracted by these days. Instead it’s Coinbase and Blockfolio, two cryptocurrency apps, that are quickly stealing the attention of young finance professionals. And the interest in Bitcoin, Ethereum and alt coins is causing some in the industry to wonder if the phenomenon can somehow be connected to online lending and merchant cash advance.
A meetup hosted by partners of Central Diligence Group (CDG) on Tuesday night in NYC, for example, was geared towards cryptocurrency enthusiasts. CDG is a merchant cash advance and business lending consulting firm. Those that attended, talked candidly about Ripple, Bitcoin, Ethereum, and the hot topic of Initial Coin Offerings (ICOs). And it did seem all connected. Companies successfully raised more than $3 billion through ICOs in 2017, for example, some of them online lending companies.
ETHLend and SALT, blockchain-based p2p lenders, each raised $16.2 million and $48.5 million respectively through ICOs. What’s more, their crypto market caps currently stand at $325 million and $754 million respectively. The latter is nearly twice as valuable as online lender OnDeck. The founder of Ripple, meanwhile, briefly became one of the richest men in the entire world.
Whether these valuations are overdone is besides the point. A smart phone is all that’s required to get in on the action and trade thousands of cryptocurrencies online, many of which move up and down by astronomical percentages over the course of a day. Becoming a millionaire overnight by hitting on the right one is a dream sought after by many. And young people, especially millennials, are become unconsciously comfortable transacting in non-government-backed currencies through technology that completely shuts out banks.
And that may be the shift in all of this to pay attention to. It isn’t that a local restaurant is going to collateralize their Bitcoin to get a loan and outcompete an MCA company, but that a portion of the monetary system eventually starts to sidestep banks.
Trying to collect on that judgment? Good luck tracing the money in cryptos.
Need to freeze funds? You can’t freeze someone’s Bitcoins if they’ve got them stored on their own hardware.
Evaluating a business’s bank statements? The transactions can only be verified on a blockchain.
You might not believe me, but it’s incredibly likely that you’ve encountered a client that has defaulted on an MCA or loan whose stash of money has been obscured in cryptos all the while their bank statements appear to show insolvency.
It’s also likely that you’ve encountered a client that has used the proceeds of their MCA or loan to buy a crypto. Maybe not the whole amount, but with some of it. One study, for example, revealed that 18% of people have purchased Bitcoin using credit. Bloomberg reported that the phrase “buy bitcoin with credit card,” just recently spiked to an all-time high.
People are even taking out mortgages to buy Bitcoin, according to CNBC.
If you think cryptocurrency is an industry completely independent of your business, consider that the market cap of cryptocurrencies is currently valued at more than $700 billion. That’s nearly twice the market cap of Goldman Sachs and JPMorgan, COMBINED. The #3 cryptocurrency by market cap, Ripple, is being pitched almost entirely to traditional financial institutions.
Bet all you want on the prediction that this bubble will burst. Maybe it will. But the underlying technology, transacting without banks in non-government backed currencies that may be difficult to trace and recover, is a genie that’s not returning to its bottle anytime soon.
In the meantime, now might be a good time to poll your employees or colleagues about their knowledge or use of cryptocurrency. You may be surprised by what you find, especially among the younger crowd.
Disclaimer: I currently hold a material amount of Ether, the currency of the Ethereum blockchain.
This past Fall, an industry colleague congratulated me on my newfound wealth. “What newfound wealth?” I reply. “What are you talking about?”
“Aren’t you a bitcoin millionaire now?” he says, smiling brightly, with a look in my direction that suggests he can see through my deceptively coy demeanor. “You were talking about it for years. You were right about it!”
“Oh, yeah… Bitcoin,” I say back while looking at the ground, embarrassed by what I am about to tell him. “I spent nearly all my Bitcoins well before the price jump,” I reveal.
He didn’t believe me, but it didn’t matter. I had no regrets up until that moment when I decided to look back and see how much my Bitcoins would’ve been worth had I just held on to them. Doing the math ultimately turned out to be a bad idea.
That’s the rise in value I missed out on by spending the Bitcoins I had been acquiring in 2014-2016. It’s not a million dollars, but it’s enough to sit back and think, what if. [Editor’s note. The market value of those Bitcoins since the time this issue went to print reached about a million dollars after all. DAMN.]
But why spend or sell them if I was a supposed true believer? I never cared much for speculating. I liked and still like Bitcoin because it’s a payment methodology that exists outside the purview and control of banks and government. It is the ultimate way to de-bank. And hey, that’s what all the fuss of this publication is about.
I started reporting on Bitcoin here in deBanked as early as 2014, mainly to an audience that didn’t know what they were and didn’t care to know. I couldn’t blame you all. Talk of digital currency, mining, and block sizes doesn’t exactly go hand-in-hand with things like online lending, merchant cash advance, and brokering deals.
A handful of diehard Bitcoin fans at the time told me they were happy to see Bitcoin legitimized through our coverage. Others told me it was complete garbage, a ponzi scheme even, that didn’t deserve any attention whatsoever.
In those days, I took a tour through the whole ecosystem by mining Bitcoin, buying it, selling it, paying people with it, and accepting payment with it. I read books about it, attended seminars on it, and watched documentaries about it. I even experimented with turning my computer into a node in the Bitcoin network to keep the ecosystem itself running smooth. I repeatedly heard critics argue that it was all a scam and I walked away every time remaining unconvinced.
Bitcoin allows users to carry their money across borders without hassle and to retain possession of their funds even if a bank or government agency wants to seize it. Perhaps these benefits appeal to criminals, but surely they also do to law-abiding citizens.
I didn’t like the volatility of it so much back when I was acquiring them. It wasn’t a very good store of value and it still isn’t. The fact that a Bitcoin I acquired for $300 is now worth $10,000 [market value at the time it went to print] is amusing but also terribly unnerving. What good is Bitcoin to legitimately use as money if the value can swing massively in an hour? And what to do if I bought 1 Bitcoin now at $10,000 and it retreated back to $300?
In a way, I may have been more excited to have held all those Bitcoins for another year without them experiencing any increase in value, rather than to have accidentally profited handsomely thanks to speculators who do not care about the underlying utility of Bitcoin.
Maybe I’m an idealist. Or maybe I’m just rationalizing why I shouldn’t cry myself to sleep over having missed out on 500k in profit. I personally believe Bitcoin will be at its most valuable when its price is stable. If we can get to that point and the world economy becomes more accepting of it as a form of payment, well then I’d be very interested in holding on to Bitcoin indeed.
I wondered, of course, if the me of three years ago would’ve agreed with my philosophy now. A blog post I wrote in November 2014 answers that question.
Below are some of the points I made then:
“Bitcoin is more than a currency. It’s not the Euro, the Yen, or the Peso. It’s a detachment from governments and banking. It’s self-control. Without the private key, your bitcoins can’t be seized.”
“I’m not necessarily speculating though. I spent almost half my bitcoins shopping on Overstock on Black Friday.”
“A 5% swing might be acceptable for an investment but it’s quite ugly for a currency.”
“Your money is not really yours. You have rights to it, but only to an extent. It can be garnished, frozen or confiscated. That’s the price of liquidity and relative stability. If you can afford to color outside the lines, where you can remove [bankers] and their control, why not experiment? There’s something pure about [Bitcoin], liberating. And when you add in the fact that it’s governed by math, it’s more than that, it’s beautiful.”
“There are indeed those holding [Bitcoin] and not spending. Rampant speculation is both a cause of volatility and an argument for its long term unsustainability. Speculators are hoping the digital currency will appreciate and make them filthy rich. If that day never comes, a big sell off will cause its value to drop.”
And so it was in 2014, I was interested in the utility of Bitcoin while concerned about the volatility of it. The value has since shot up to the moon, largely due to speculation. Along the way my views caused me to miss out on becoming a Bitcoin millionaire.
And I couldn’t care less. Wake me up when the price stabilizes.
Editor’s Note: Between the time this story was sent off to print and now (when it’s being published online), the market value of those Bitcoins had increased from $500,000 to nearly $1 million. Incredibly, I legitimately would’ve been a Bitcoin millionaire.
Editor’s Note 2: It’s been a long time since I have played around with being a Bitcoin node. More recently, I have become a node on Ethereum, a blockchain for decentralized applications that also serves as the backbone platform for things like Initial Coin Offerings.
Ok, so this is a shameless affiliate marketing offer. If you buy $100 worth of Bitcoin from Coinbase using this link, you’ll not only get an extra $10 worth of Bitcoin free, but I’ll get $10 worth of free Bitcoins as well.
While it’s awesome that a single Bitcoin is worth $10,000 these days, I personally fell in love with the utility of the currency 3 years ago. I mined it, bought it, sold it, became a node on the network, donated it, spent it, accepted it as payment, went to meetups dedicated to it, and read books on it. The ironic part about it all is that few, if any, people cared about my coverage of it. Now that’s it up nearly 900% YTD, readers have been asking about it.
Before you get get caught up in the hype aspect, maybe take a minute to read through some of my very old blog posts about Bitcoin and decide for yourself if the currency makes sense.
- 12/3/14 – My Satoshi Monday – My trip to the Bitcoin Center
- 12/8/14 – How to Use Bitcoin – I bought a computer monitor on Overstock with Bitcoin
- 12/18/14 – Confessions of a Bitcoin Miner – My tale of mining Bitcoins
- 3/10/15 – deBanked Inks Deal With Lenders Marketing in Bitcoin – deBanked priced an advertising deal in Bitcoins
- 4/20/15 – Rand Paul Speaks at Bitcoin Event – A forward thinking Senator latched on to Bitcoin years ago