Fnality, headquartered in London and specializing in the development of wholesale payment systems based on Distributed Ledger Technology (DLT), revealed its successful completion of a Series B funding round, amassing £77.7 million (approximately €89 million).
Goldman Sachs and BNP Paribas took the lead in this funding round, which also saw the involvement of DTCC, Euroclear, Nomura, and WisdomTree. Notably, several Series A investors, including Banco Santander, BNY Mellon, Barclays, CIBC, Commerzbank, ING, Lloyds Banking Group, Nasdaq Ventures, State Street, Sumitomo Mitsui Banking Corporation, and UBS, made additional investments in Fnality.
With this recent injection of capital, Fnality has now accumulated a total of £132.7 million (approximately €152 million) in funding.
The funding acquired by the UK-based company will be allocated towards the establishment of a global liquidity management ecosystem, designed to empower digital payment models in both established financial markets and emerging tokenized asset markets.
This ambitious initiative encompasses several crucial milestones, including the launch of Fnality Payment Systems (FnPS) in major currencies, such as USD, fostering robust ecosystem and network expansion, and the development of a compelling array of use cases that promise to revolutionize payment processes, settlement procedures, and collateral management across the global financial markets.
Rhomaios Ram, CEO of Fnality International, emphasized the significance of this Series B funding round, stating, “Our Series B funding round reflects the financial sector’s demand for a blockchain-based settlement solution backed by central bank money. This solution serves as a bridge between traditional finance (TradFi) and decentralized finance (DeFi) within the wholesale markets. Each Fnality Payment System leverages Distributed Ledger Technology (DLT) to provide a 24/7 payment infrastructure, capable of reducing settlement cycles to real-time. This groundbreaking development significantly enhances intraday liquidity management and introduces noteworthy advancements in the speed, functionality, and resilience of wholesale payments.”
Fnality: Bridging the Divide Between Traditional and Digital Finance
Established in 2019, Fnality is at the forefront of developing regulated wholesale payment systems that leverage Distributed Ledger Technology (DLT), under the regulatory oversight of central banks in key jurisdictions.
Within each Fnality Payment System (FnPS), participants utilize settlement balances held directly at the central bank to facilitate real-time wholesale payments. These settlement balances are characterized by their insolvency protection and are fully backed by an equivalent amount of central bank money in the respective currency.
FnPS offers financial institutions a swifter, more secure, and robust digital payment management solution, catering to the increasing adoption of tokenized assets and marketplaces. Notably, the Sterling FnPS has gained recognition from HM Treasury as a systemically significant payment system in the UK, thereby subjecting it to regulatory oversight by the Bank of England and the Payment Systems Regulator (PSR). This distinction made the Sterling FnPS the world’s first regulated DLT-based payment system.
Fnality’s network of distributed Financial Market Infrastructures (dFMIs) is poised to deliver a versatile suite of use cases. The expansion of FnPSs into other core jurisdictions will enable real-time cross-currency payments around the clock. The foundational settlement balances, boasting the credit quality of central bank money, are essential for novel digital asset markets and offer a high-quality on-chain cash asset.
FnPS empowers participants to efficiently manage their cash and collateral from a unified, global liquidity pool. This capability is realized through the seamless integration of real-time cross-currency payment versus payment (PvP) functionality with the ability to execute any delivery versus payment (DvP) transaction atomically and instantaneously. Consequently, participants gain enhanced control over the management of a vast majority of their cash and collateral holdings.
Distributed Ledger Technology (DLT) has convincingly demonstrated its potential to enhance the speed, security, and efficiency of value exchange within the global wholesale markets. This is evidenced by its real-time settlement capabilities for tokenized securities, instantaneous cross-border FX swaps, and rapid repo transactions.
Fnality, headquartered in the UK, enjoys the support of 17 major institutions as shareholders. Notable among these are Banco Santander, BNY Mellon, Barclays, CIBC, Commerzbank, Credit Suisse, Euroclear, ING, KBC Group, Lloyds Banking Group, Mizuho Financial Group, MUFG Bank, Nasdaq, Nomura, Sumitomo Mitsui Banking Corporation, State Street Corporation, and UBS. These prominent financial entities recognize the transformative potential of DLT in revolutionizing the wholesale markets and have aligned with Fnality to harness its benefits.
What Are the Investor’s Thoughts?
Mathew McDermott, Global Head of Digital Assets at Goldman Sachs, comments, “Fnality’s solution is a pivotal facilitator for the digital asset ecosystem, positioning the company at the forefront of payment innovations and the institutional embrace of DLT. Fnality’s application of blockchain technology offers a resilient means for institutions to leverage central bank funds across a broad spectrum of potential use cases, including instant cross-border, cross-currency payments, collateral mobility, and security transactions.”
Olivier Osty, Head of Corporate & Institutional Banking Global Markets at BNP Paribas, states, “Collaborating with innovative companies is fundamental to BNP Paribas Global Markets’ strategy and underscores our commitment to being a significant partner for our clients. BNP Paribas’ investment in Fnality demonstrates the bank’s ongoing dedication to exploring and supporting innovative solutions within the banking industry.”
Frank La Salla, President, CEO, and Director at DTCC, affirms, “As the worlds of TradFi and DeFi converge, DTCC is committed to collaborating with industry stakeholders, regulators, and other participants to establish the standards and governance necessary to accelerate ecosystem growth while ensuring the highest levels of market safety and stability. Our investment in Fnality complements our agreement to acquire Securrency and will play a role in fostering new digital payment infrastructure crucial for establishing a robust digital ecosystem, promoting interoperability, and driving the adoption of digital assets.”