Blockchain payment firm Fnality raises $136M in round led by major banks
News Summary
London-based blockchain payments company Fnality has secured $136 million in a Series C funding round. The round was led by major financial institutions including Bank of America, Citi, KBC Group, Temasek, Tradeweb, and WisdomTree, with existing investors Goldman Sachs, Santander, Barclays, and UBS also participating. Fnality CEO Michelle Neal stated that the funding reflects a shared conviction in a new foundation for the future of money, with their blockchain-based settlement systems offering “24/7 payment rails, real-time settlement, and enhanced liquidity.” The company, which launched its sterling-denominated Fnality Payment System in the UK last year, aims to modernize wholesale payments via blockchain infrastructure tied to central bank reserves. The new capital will facilitate Fnality’s expansion into the US dollar and euro markets, pending regulatory approvals. Fnality uses Distributed Ledger Technology (DLT) to streamline institutional settlements, enabling real-time repo, tokenized securities settlement, and cross-currency payments, bridging traditional finance with tokenized markets while boosting liquidity and reducing settlement risks. This funding round coincides with growing interest in crypto payment rails. Recently, Google launched an open-source AI payment protocol supporting stablecoin transactions, and SBI Shinsei Bank partnered with Partior and DeCurret DCP to explore multicurrency tokenized deposits for cross-border settlements.
Background
Fnality is a London-based blockchain payments company focused on transforming wholesale payments and institutional settlements using Distributed Ledger Technology (DLT). Its core objective is to provide an efficient, real-time settlement infrastructure for both traditional financial markets and emerging tokenized markets. The company is not new to significant institutional backing. In 2023, Fnality successfully raised $95 million in a funding round led by Goldman Sachs and BNP Paribas, with participation from Euroclear, DTCC, WisdomTree, and Nomura. This history demonstrates consistent and strong interest from major financial institutions in Fnality's model and the broader potential of blockchain in finance.
In-Depth AI Insights
Why are traditional financial institutions (TradFi) heavily investing in blockchain payment firms like Fnality, and what does this signal for their long-term digital asset strategy? - The investment in Fnality is not merely an experimentation with technology, but a strategic move by TradFi institutions to build and control foundational infrastructure within the digital asset ecosystem. This indicates an intent to integrate DLT into their core operations rather than passively accepting disruption from external players. - It reflects a recognition by major banks of the inefficiencies in existing wholesale payment systems and the potential competition from novel digital payment solutions. By investing and co-developing, they aim to shape future payment standards and secure their central role in the tokenized finance wave. - This can also be seen as a defensive strategy to mitigate future potential regulatory risks and market disintermediation by participating in and influencing blockchain technology development, while exploring new revenue streams, such as 24/7 real-time settlement and enhanced liquidity services, within compliant frameworks. What regulatory hurdles and market adoption challenges will Fnality face in expanding to USD and Euro markets, especially given the evolving stance of the Trump administration on digital assets? - Regulatory Arbitrage Risk: While Fnality aims to provide 'central bank reserve-backed' stable settlements, regulatory bodies across jurisdictions (especially the US and EU) may have significantly different classifications, treatments, and risk assessments for DLT and tokenized assets. Harmonizing these differences will be a primary obstacle. - Market Competition and Inertia: Both USD and Euro markets have deeply entrenched and highly liquid traditional payment infrastructures. Persuading existing market participants to shift from established systems to a new platform, even if technologically superior, requires overcoming significant inertia, complex integration costs, and trust barriers. - Trump Administration's Stance on Digital Assets: While the Trump administration may be open to innovation, its focus on financial stability and national security could lead to cautious or even restrictive policies regarding digital dollars (CBDCs) or private stablecoins. Fnality's 'central bank reserve-backed' model will likely require extensive and time-consuming coordination with the US and European central banks to gain necessary approvals and trust, especially in the USD market where any form of 'digital dollar' could face intense scrutiny. Beyond efficiency, what strategic advantage do these blockchain-based wholesale payment systems offer to the participating banks, and how might this reshape the global financial architecture? - Enhanced Control and Optimization of Liquidity: Through real-time settlement and smart contract capabilities, participating banks can manage their liquidity with greater precision, reduce intraday credit risk, and potentially unlock capital currently tied up in traditional settlement cycles. - Creation of New Financial Products and Services: The DLT infrastructure can support more complex, automated financial products such as real-time repos, instant delivery-versus-payment for tokenized securities, and novel cross-border cash management solutions, generating new fee income for banks. - Building a Controlled, Permissioned Digital Ecosystem: By leading platforms like Fnality, major banks can create and control a permissioned, regulated digital financial ecosystem. This ensures their intermediary role in the future digital economy, effectively manages risk, and potentially establishes new industry standards and power structures, further solidifying their dominant position within the global financial system.