Executive Summary

Blockchain payment firm Fnality has completed a $136 million Series C funding round, led by WisdomTree and a consortium of global banks including Bank of America, Citi, and Goldman Sachs. This significant capital injection is aimed at enabling Fnality to expand its regulated distributed ledger technology (DLT) payment systems for central bank digital currencies (CBDCs) into the USD and EUR markets. The investment validates growing institutional interest in DLT solutions for traditional finance, particularly for wholesale payments, and signals potential disruption and increased efficiency in the multi-trillion dollar cross-border payments sector.

The Event in Detail

Fnality, a London-based operator of regulated blockchain payment systems, announced a $136 million Series C funding round. The round was led by WisdomTree, alongside major financial institutions such as Bank of America, Citi, KBC Group, Temasek, and Tradeweb. Existing investors including Santander, Barclays, BNP Paribas, DTCC, Euroclear, Goldman Sachs, ING, Nasdaq, State Street, and UBS also participated. This follows previous funding rounds of $95 million in 2023 and $67 million in 2019.

The capital infusion is designated for the expansion of Fnality's DLT-enabled settlement systems across major currencies and markets. The company launched the Sterling Fnality Payment System (£FnPS) in the UK in December 2023, which became the world's first regulated wholesale payment system to settle in digital cash fully backed by central bank funds. In December 2024, the UK government granted £FnPS settlement finality designation, underscoring its systemic importance. These systems facilitate real-time settlement of tokenized securities, foreign exchange, and repo transactions, offering delivery-versus-payment (DvP) and payment-versus-payment (PvP) functionality designed to reduce counterparty risk and increase efficiency in institutional markets.

Fnality's strategic objective is to extend this model into the USD and EUR markets, pending regulatory approvals from the Federal Reserve and the European Central Bank. The company emphasizes a direct approach, conducting payments on actual central bank money, thereby eliminating credit and settlement risk. This contrasts with solutions reliant on intermediary tokens or bridge currencies. The "earmarking" feature of its £FnPS, developed in partnership with Banco Santander, Lloyds Banking Group, and UBS, allows institutions to reserve funds for specific purposes, adding programmability to central bank digital money.

Market Implications

This funding round underscores a growing trend of institutional adoption of DLT within traditional finance. Fnality's expansion plans target the substantial $120 billion-plus cross-border payments market, aiming to address longstanding inefficiencies such as slow settlement times and high costs that tie up significant capital and complicate liquidity management. By enabling instant, atomic settlement with the credit security of central bank reserves, Fnality seeks to significantly enhance efficiency and reduce risks in wholesale finance.

Broader market movements support this direction. Projects like JPMorgan's Onyx and Euroclear's tokenization pilots indicate an increasing institutional push into digital settlement infrastructure. Similarly, HSBC has expanded its Tokenised Deposit Service (TDS), allowing real-time, 24/7 settlement of tokenized fiat deposits across multiple currencies including GBP, EUR, and USD, highlighting the industry-wide demand for "always-on" blockchain-based platforms for cross-border payments.

This investment validates DLT's role as a foundational technology bridging traditional financial systems with tokenized markets, potentially fostering wider adoption of blockchain technology in critical financial infrastructure.

Expert Commentary

Michelle Neal, CEO of Fnality, stated that the funding reflects "a shared conviction that the future of money demands a new foundation, one with Fnality at its core." This sentiment highlights the perceived necessity for modernized payment rails within the financial ecosystem.

Jonathan Steinberg, CEO of WisdomTree, described Fnality's platform as a "critical foundation" for tokenized finance. He added that WisdomTree's investment "reflects our ambition to plug directly into the rapidly growing tokenized markets," indicating a strategic move to integrate with evolving digital asset infrastructure.

Deepak Mehra, Head of Digital Strategy at Citi, noted that Fnality aligns with the bank's strategy to build "more efficient, interoperable payment systems for digital assets." Representatives from Bank of America and Citi further emphasized that regulated DLT infrastructure could reshape wholesale markets by providing faster, more resilient, and interoperable settlement solutions.

Broader Context

Fnality's strategy to modernize wholesale payments via blockchain infrastructure directly tied to central bank reserves positions it as a key player in the evolution of financial market infrastructure. Unlike some blockchain solutions that use intermediary tokens or bridge currencies, Fnality's reliance on direct central bank money aims to eliminate credit and settlement risk, distinguishing its approach in the market.

The firm's expansion into the USD and EUR markets is contingent upon obtaining necessary regulatory approvals from authorities such as the Federal Reserve and the European Central Bank. This regulatory pathway underscores the critical role of governmental oversight in the development and adoption of DLT-based financial systems. The broader context includes other financial institutions developing similar tokenized deposit services, signaling a collective industry effort towards enhancing global payment efficiency and resilience through distributed ledger technologies.