The U.S. financial landscape is on the brink of a tectonic shift, and those who fail to adapt risk disappearing. This is about blockchain payments, which major banking giants already view as a strategic tool for expansion at the expense of mid-sized and smaller competitors. Such a conclusion emerges from an analysis of statements by Scott Shay, founder of the bankrupt Signature Bank and creator of the Signet payment network.
In my assessment, the situation is far more serious than it appears at first glance. Shay, who personally went through the bank's collapse due to depositor panic, emphasizes that large financial institutions have finally recognized the commercial potential of distributed ledgers. They are actively implementing infrastructure for instant cross-border transfers, 24/7 settlements, and reduced operational costs. Meanwhile, regional and smaller banks, which have traditionally relied on slow and expensive correspondent networks, remain in the rearguard.
Why Are Small Banks Doomed?
The problem is not a lack of technology, but inertia of thinking. Many smaller credit institutions still perceive blockchain as an exotic novelty tied to volatile cryptocurrencies, rather than as a reliable payment protocol. This is a strategic mistake. Major players, such as JPMorgan with its JPM Coin or Citibank with its own developments, already offer corporate clients real-time settlements. Once this practice becomes widespread, small banks will lose their key advantage—a local client base that more technologically advanced competitors will lure away.
Shay rightly notes that Signet, launched back in 2018, proved the viability of the instant blockchain payment model. But its tragic fate—the bank was shut down by regulators in March 2023—shows that even pioneers are vulnerable to systemic risks. Nevertheless, the technology has not disappeared, and now it will be leveraged by those with greater resources for scaling.
My forecast: in the next 2-3 years, we will witness a wave of consolidation in the U.S. banking sector. Small banks will either be absorbed or transformed into niche structures serving narrow segments where settlement speed is not critical. For the crypto industry, this is a dual signal: on one hand, the legitimization of blockchain in traditional finance will accelerate; on the other, independent payment networks like Signet may be displaced by corporate solutions.
My expert opinion: The market is moving toward an oligopoly, where control over payment infrastructure will become the primary asset. Small banks should not try to catch up with the giants, but rather seek partnerships with crypto protocols to preserve their autonomy—otherwise, their fate is sealed.