Fnality's $136M Leap: Can Regulators Keep Pace with Tokenized Finance?

Fnality, a London-based fintech firm specializing in blockchain-based wholesale payment systems, has secured $136 million in a Series C funding round, signaling growing institutional confidence in tokenized finance. The round was led by WisdomTree, Bank of America, Citi, KBC Group, Temasek, and Tradeweb, with existing investors including Goldman Sachs, UBS, and Barclays also participating. This follows a $95 million Series B round in 2023, led by Goldman Sachs and BNP Paribas, which marked Fnality’s initial push into regulated digital currency settlementsFnality Raises $136M to Expand Blockchain Payment Systems for Banks^[1].

The firm’s platform leverages distributed ledger technology (DLT) to facilitate real-time, atomic settlements using tokenized versions of central bank money. This approach eliminates intermediaries in transactions such as delivery-versus-payment for digital securities and payment-versus-payment for foreign exchange. For instance, a repo trade that traditionally takes a day to settle could now occur instantaneously, freeing up liquidity for banksGoldman Sachs-backed Fnality raises $136M to replace SWIFT …^[2]. Fnality’s current system, the Sterling Fnality Payment System (£FnPS), has already enabled sterling transactions with central bank guarantees, and the firm plans to expand into U.S. dollar and euro markets, pending regulatory approvals from the Federal Reserve and European Central BankFnality adds Goldman, BNP Paribas, DTC…^[3].

The new capital will accelerate Fnality’s expansion into tokenized asset settlements, including stablecoins and securities. The firm’s “earmarking” feature, developed in partnership with Banco Santander, Lloyds Banking Group, and UBS, allows institutions to allocate funds for specific purposes, ensuring they are only used for their intended transactions. This programmability adds a layer of conditionality to central bank digital money, enabling automated payment flows tied to events like asset deliveryGoldman Sachs-backed Fnality raises $136M to replace SWIFT …^[2]. By operating on central bank-supervised rails rather than commercial bank money, Fnality distinguishes itself from competitors like JPMorgan’s Kinexys and Partior, which rely on commercial bank reserves and expose transactions to credit riskGoldman Sachs-backed Fnality raises $136M to replace SWIFT …^[2].

Fnality’s CEO, Michelle Neal, emphasized the investment as a step toward a “hybrid future of global finance,” where traditional institutions integrate with decentralized markets. The funding aligns with broader industry trends, as major banks seek to modernize infrastructure for tokenized assets. Existing investors, including WisdomTree’s CEO Jonathan Steinberg, highlighted the platform’s potential to become a foundational layer for future financial services, given its use of central bank-backed reservesFnality Raises $136M to Expand Blockchain Payment Systems for Banks^[1].

The market for cross-border payments, valued at over $120 billion, remains a key target for Fnality. Its technology addresses inefficiencies in current systems, which are often slow, costly, and fragmented. By enabling 24/7 settlements and reducing counterparty risk through tokenization, Fnality aims to capture a significant share of this market. However, regulatory hurdles—particularly for expanding into U.S. and eurozone currencies—remain a critical challengeGoldman Sachs-backed Fnality raises $136M to replace SWIFT …^[2].

Fnality’s approach contrasts with projects like RippleNet and Stellar, which use intermediary tokens or bridge currencies. Instead, Fnality executes direct swaps of fiat currencies on the blockchain, minimizing settlement delays and credit exposure. This strategy positions the firm as a potential disruptor in wholesale finance, where speed and capital efficiency are paramountGoldman Sachs-backed Fnality raises $136M to replace SWIFT …^[2].