Fnality raised $95 million from Goldman Sachs and BNP Paribas

Fnality, a London-based fintech company specializing in tokenizing major currencies backed by central bank cash, recently completed a significant Series B funding round, raising $95 million. This investment was led by Goldman Sachs and BNP Paribas, two major players in the global banking sector. The funding attracted a diverse group of participants, including settlement houses like Euroclear and the Depository Trust and Clearing Corporation, global exchange-traded fund firm WisdomTree, and existing investor Nomura.

What is Fnality?
Fnality is a financial technology company specializing in blockchain-based payments systems. It is described by some as a wholesale stablecoin, similar to JPM Coin, though Fnality itself resists this label. Fnality is backed by 15 financial institutions and is focused on creating financial market infrastructure for on-chain payments. The company’s main project, Fnality Global Payments, will comprise a series of local payment systems, with balances backed one-for-one by deposits at central banks. The targeted digital currencies for this system include the U.S. dollar, Euro, British pound, Canadian dollar, and Japanese Yen. This system requires approval from central banks like the U.S. Federal Reserve, the Bank of England, or the European Central Bank to operate.

Fnality was originally initiated in 2016 as a consortium led by UBS and the technology startup Clearmatics, under the name Utility Settlement Coin. It is currently going through the central bank approval process in the U.K., U.S., Europe, Canada, and Japan for the respective currencies.

To date, Fnality has raised a total of £132.7 million (approximately $158 million). This includes the £55 million raised in its first round in June 2019 and the additional funds from subsequent rounds. The founding shareholders of Fnality are a consortium of major financial institutions, including Banco Santander, BNY Mellon, Barclays, CIBC, Commerzbank, Credit Suisse, ING, KBC Group, Lloyds Banking Group, Mizuho Bank, MUFG Bank, Nasdaq, Sumitomo Mitsui Banking Corporation, State Street Corporation, and UBS.

The importance of this investment lies in Fnality’s strategic aim of developing a 24/7 global liquidity management network. This network is designed to support innovative digital payment models in wholesale financial markets and the rapidly growing tokenized asset markets. Fnality’s approach includes utilizing blockchain technology to enable institutions to use central bank funds for various applications, such as instantaneous, cross-border, cross-currency payments, collateral mobility, and security transactions.

This investment also marks a foundational step towards the launch of the Sterling Fnality Payment System in 2023, subject to approval from the Bank of England. The initiative’s roots can be traced back to 2019 when Fnality was founded as a UBS-led blockchain project under the Utility Settlement Coin (USC) initiative. The USC project aimed to create digital versions of major currencies for wholesale payments and transactions involving digital securities on an Ethereum-based blockchain.

The involvement of prominent banking institutions like Goldman Sachs, BNP Paribas, and JPMorgan, which recently introduced a new programmable payment feature on its JPM Coin platform, underscores the growing integration of blockchain technology in mainstream financial services. This trend reflects a broader shift in the financial industry towards embracing blockchain and tokenization, indicating a significant evolution in how financial transactions and settlements might be conducted in the future