Today blockchain settlements startup Fnality announced an investment from Mizuho Bank. It is one of the top five banks of Japan, two of which are already shareholders of Fnality alongside 12 other major financial institutions. In June, the startup raised £50 million in a Series A funding round.
“We see that distributed ledger technology (DLT) offers huge potential and the use of USC (Utility Settlement Coin) as a settlement asset will be pivotal in enabling this change,” said Fumio Tajima, Executive Officer at Mizuho Bank.
In its announcement, Fnality said it has made progress in developing the technology for the initial application of the USC. Earlier this year Ledger Insights was told a USC launch is expected in 2020.
The company aims to create an institutional digital currency. Initially, there will be digital versions of five currencies Canadian Dollars, Euros, Pounds, Japanese Yen and US Dollars. The USC is for peer-to-peer on-chain payments for use by financial institutions (only) to make instant settlements with finality. This potentially could be used for on-chain foreign currency transactions or the settlement of stock trades, derivatives, or other assets.
The digital currency will be 100% backed by deposits at central banks.
Three months ago, none other than the Governor of the Bank of England spoke about the benefits of digital money backed by central bank deposits. He discussed Facebook’s Libra but also talked about the USC specifically: “This can drive efficiency and resilience in operational processes and reduce counterparty risks in the system, unlocking billions of pounds in capital and liquidity that can be put to more productive uses,” he said.
“Having all three of Japan’s major banks involved in Fnality’s initial work to build out our foundations will help us ensure we make the best possible choices to help build tomorrow’s financial market infrastructure both in Japan and globally,” said Rhomaios Ram, CEO of Fnality.
Mizuho now joins other heavyweights like Banco Santander, Bank of New York Mellon, Barclays, CIBC, Commerzbank, Credit Suisse, ING, KBC Group, Lloyds Banking Group, MUFG Group, Nasdaq, Sumitomo Mitsui Banking Corporation, State Street Corporation and UBS. Fnality did not release the investment amount.
Mizuho Bank is no stranger to digital currencies. It is the founder and driver behind J-Coin, a digital currency for Japanese consumer payments. Mizuho managed to sign up 60 other Japanese banks.