Briefing
The DLT wholesale settlement system Fnality secured a $135 million Series C funding round, led by new strategic investors including Bank of America and Citi, signaling a definitive commitment from global systemically important banks (G-SIBs) to scale foundational digital market infrastructure. This capital infusion immediately validates Fnality’s operational model ∞ which utilizes tokenized commercial bank money backed by central bank deposits ∞ and accelerates its expansion into new jurisdictions, fundamentally transforming how high-value transactions are settled across asset classes, with total funding now exceeding $310 million.
Context
Traditional wholesale financial markets operate on a sequential, multi-day settlement cycle (T+2 or T+1) for securities and often rely on correspondent banking networks for cross-border FX, resulting in significant counterparty credit and liquidity risk. The prevailing operational challenge is the temporal gap between the transfer of an asset and the transfer of its corresponding payment, necessitating large collateral pools and introducing friction that prevents true capital efficiency across global markets.
Analysis
This adoption directly alters the securities and payments settlement system by replacing sequential, gross settlement with atomic Delivery Versus Payment (DvP) and Payment Versus Payment (PvP) via a shared Distributed Ledger Technology (DLT). Fnality’s system, which tokenizes commercial bank deposits, creates a single, compliant, and instantaneously transferable digital asset for money. The chain of cause and effect is clear ∞ the use of this tokenized settlement asset on a shared ledger eliminates the principal risk inherent in the time lag of traditional settlement, which, in turn, frees up collateral and dramatically improves capital efficiency for the participating G-SIBs and their clients across use cases like intraday repo and tokenized securities trading. This systemic shift is significant for the industry because it establishes a template for regulated, on-ledger finality without requiring the creation of a new, unregulated digital currency.
Parameters
- Investment Round ∞ $135 Million Series C
- Core Technology ∞ DLT Wholesale Settlement System
- New Strategic Investors ∞ Bank of America, Citi, Temasek, Tradeweb
- Total Capital Raised ∞ $310 Million
- Primary Use Cases ∞ Delivery Versus Payment (DvP), FX Payment Versus Payment (PvP), Intraday Repo
- Regulatory Status ∞ Live in the UK; 18-month interim approval as a state-chartered innovation bank in the US
Outlook
The immediate next phase is the commercialization and full regulatory launch of the US entity, which will directly challenge existing correspondent banking and securities settlement infrastructure in North America. The second-order effect will be the establishment of a new industry standard for real-time gross settlement (RTGS) on DLT, pressuring competitors to either integrate with the Fnality network or rapidly develop equivalent, interoperable solutions. This scaling of tokenized money for wholesale use creates the necessary payment rail for the broader institutional tokenization of Real World Assets (RWA) to achieve mass adoption.
