Signature Bank Founder Expands N3XT Digital Dollar to Take on Stablecoins

For years, banks and stablecoins have offered businesses an awkward tradeoff.

Keep your dollars inside the banking system and get the protections that come with it — but accept banking hours, wire delays and closed networks. Or, move those dollars into stablecoins and gain 24/7 settlement and programmability, but leave the traditional bank deposit structure behind.

N3XT, a Wyoming narrow bank, is betting users and businesses won't want to have to choose.

At the SALT Wyoming Blockchain Symposium, N3XT announced Tuesday that its blockchain-powered narrow bank is expanding its N3XT Digital Dollar, or NDD, beyond its own customers, allowing businesses to send what N3XT describes as a bank-regulated U.S. dollar deposit token directly to wallets on a public blockchain.

In other words: N3XT wants bank dollars to move more like stablecoins.

“Our mission at N3XT is to enable the transfer of actual US dollars with the speed of crypto,” N3XT founder Scott Shay said in announcing the expansion. “This is what banking should look like in the 21st century.”

It is a potentially important distinction at a moment when much of Wall Street is rushing to put traditional financial products onchain.

Of course, tokenized deposits are not new. But they have largely operated inside the banks that issue them, creating closed-loop systems in which customers can move tokenized money quickly between approved participants but lose much of that functionality the moment the funds need to leave the network.

N3XT is trying to break that wall down. The bank says NDD can now move to public-chain wallets outside N3XT, giving businesses the ability to settle transactions globally and around the clock while still holding a token representing a bank deposit.

“Traditional banking forces businesses to mold their financial operations to rigid settlement schedules and multi-day clearing delays,” N3XT founder and CEO Jeffrey Wallis said. “We’re moving past closed-loop tokenized deposits by enabling usability beyond our clients.”

NDD is structured as an ERC-20 token and backed 1-to-1 by cash or very short-term U.S. Treasuries, according to N3XT. The company says reserves are matched against outstanding tokens and that the bank also maintains regulatory capital.

That structure reflects the broader thesis Shay has been pursuing since regulators targeted the bank he co-founded, Signature Bank, for processing more than $1 trillion for clients at its peak. Government regulators shut the bank down in 2023.

Rather than lending customer deposits out through a traditional fractional-reserve model, N3XT was built as a narrow bank. Customer dollars are instead held against highly liquid assets, while blockchain rails handle the movement of money.

NDD pushes that idea one step further.

A business does not necessarily need to be a N3XT banking customer to hold or transact with the token. For now, outside wallets must be nominated by an existing N3XT client. The company says it plans to allow any business to nominate a wallet within the next month.

That begins to make NDD look much more like the stablecoins that have exploded in popularity precisely because they can move outside traditional banking hours and between parties that do not share the same bank.

But N3XT is making a point of arguing that NDD is not just another stablecoin.

“Regulatory compliance is at the forefront of everything we build, ensuring enterprise treasurers have 100% certainty that their funds are backed 1-to-1 by real liquid dollars,” N3XT founder and CTO Aurélien Bonnel said.

The company is also taking a different approach to controlling who can interact with the token. Rather than relying primarily on a denylist to freeze addresses after problems arise, N3XT says wallets are screened in advance and added to an allowlist before they can transact in NDD.

For institutional users, that could be a feature rather than a bug.

The crypto industry has spent years proving that dollars can move globally in seconds. The harder problem has been convincing regulated financial institutions that they can do the same thing while satisfying the compliance requirements attached to banking.

N3XT is betting that an allowlisted public-chain token can bridge that gap. And because NDD runs as an ERC-20 token on Ethereum, businesses can incorporate it into smart contracts and automated payment workflows. N3XT points to uses including atomic swaps, liquidity management across wallets and multi-party payment waterfalls that might otherwise require a series of intermediaries and manual approvals.

Cross-border commerce is another obvious target.

Today, a business sending money internationally can still run into banking cutoffs, time-zone mismatches and settlement delays even when both counterparties operate digitally. N3XT says NDD transactions can settle within seconds, 24 hours a day, without bank transaction fees.

The company is also targeting cases in which the movement of money is tied directly to other conditions—goods arriving, documents being verified or multiple parties signing off on a transaction.

That is where the distinction between merely digitizing a dollar and making it programmable begins to matter.

Shay has argued that much of traditional finance’s embrace of crypto has stopped short of that more radical redesign. Banks can tokenize assets and still leave the same intermediaries, settlement processes and economics underneath.

N3XT’s pitch is that the better approach is to rebuild the underlying movement of money itself.

“We are actualizing a corollary to Satoshi Nakamoto’s vision by moving US dollars directly on-chain,” Shay said.

Stablecoins proved there is enormous demand for dollars that can move continuously across the internet. Banks increasingly want the same functionality without surrendering the deposit relationship. N3XT is now testing whether those two worlds have to remain separate at all.

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