Today Fnality, the blockchain wholesale payment and settlement platform, announced its £77.7m ($95m) Series B funding round led by Goldman Sachs and BNP Paribas. The two big banks are new investors alongside the DTCC. Existing backers include 13 global banks, Euroclear, Nomura, Nasdaq and Wisdomtree.
Formerly called the Utility Settlement Coin, the wholesale tokenized money is backed by deposits at the central bank. Banks transfer money from their Bank of England accounts to the Fnality UK central bank account where it’s tokenized. It can then be used to settle securities transactions, to provide collateral and various other use cases. Because the money is tokenized it enables instant atomic settlement, reducing counterparty risk.
One of the intended use cases is cross currency payments. Fnality plans its digital pound to be one of several currencies, but each needs the cooperation of the local central bank. According to a statement, Fnality seems optimistic about the launch of a USD token. Previously it was bullish about the euro but there’s no mention of it. Industry insiders told Ledger Insights the EU authorities are less supportive as they’re exploring wholesale CBDC solutions.
“Fnality’s solution is a key enabler for the digital asset ecosystem and the company is well-positioned to be at the forefront of payment innovations and institutional adoption of DLT,” said Mathew McDermott, Global Head of Digital Assets at Goldman Sachs.
UK based Fnality was designated as a systemically important payment system in August last year. It was due to launch in October 2022, but regulatory approval delayed the process. While it hopes to launch this year, it still needs final Bank of England clearance.
18 institutions participated in the Series B
Credit Suisse was amongst its existing backers and presumably that holding has been merged with UBS. The only two Series A backers that did not invest were MUFG and Mizuho. That might indicate less optimism about a Fnality digital yen. Or the two big Japanese banks are investing elsewhere such as the Progmat tokenization platform. On the other hand, SMBC and Nomura participated in the latest round.