Signature’s Signet Provided Path for Tether Holders (Correct)

Tether Holdings Ltd. doesn’t have direct access to the US banking system, but for a while it found at least one pathway: through Signature Bank.

Tether instructed crypto clients to pay for its stablecoins by sending dollars to its Bahamas-based banking partner Capital Union Bank Ltd.via Signature’s Signet payments platform, according to people with knowledge of the situation. While it’s unclear when the setup started, it was in place when Signature Bank was seized by regulators last month, said the people, asking not to be identified because the information isn’t public.

The arrangement underscores the difficulty crypto firms ...