Fnality Unveils Earmarking for Tokenized Payments

What is Fnality and Earmarking?

Fnality International is backed by 20 of the world’s largest financial institutions. Its main goal is to modernize how banks settle large transactions using tokenized central bank money.

In simple terms, when big banks trade securities or settle financial deals, they need to move large sums of money. If those funds aren’t available when needed, it can lead to penalties and failed transactions.

To solve this, Fnality now allows banks to earmark funds for specific transactions. This means an amount of tokenized currency can be reserved ahead of time for a particular deal at a specified moment. It ensures the money will be there when needed.

John Whelan, Managing Director of Digital Assets at Banco Santander, explained the importance of this move. He said the earmarking feature will help the financial industry work with atomic transactions. In such deals, either all parts of a transaction happen at once or none of them do. There’s no risk of only some parts completing while others fail.

Who’s Involved in the Development?

Three major banks helped develop and launch this new programmable payment feature:

These banks were the first to go live on Fnality’s sterling payment system, known as £FnPS. This new earmarking feature builds on their earlier work, which introduced 24/7 instant payments for things like margin payments, FX swaps, and repo transactions.

Recent Funding and Financial Update

Fnality also shared news about a £20 million convertible loan note issued on 30 September 2024. This funding wasn’t public until now. The note will convert into equity once Fnality completes its ongoing Series C funding round.

Here’s a quick look at Fnality’s funding history:

Despite these significant investments, Fnality is still in its early stages of commercial operations. As expected with new financial solutions, banks take time to integrate new systems. That’s why Fnality did not generate any revenue in 2024, its first full operational year.

The company recorded a pre-tax loss of £28.9 million in 2024. This is slightly higher than its loss in 2023. However, it still had nearly £34 million in cash on hand by the end of the year, giving it room to continue growing.

What’s Next for Fnality?

Fnality has big plans ahead. One of its long-term goals is to expand into foreign exchange (FX) settlement. This will become possible once it launches a second currency system.

The company is already preparing to release a US dollar version of its settlement platform. It has even applied for a banking license in the United States. The new American subsidiary will be called Fnality XB, a name that hints at cross-border payment ambitions.

Once this dollar system is operational, Fnality will be able to handle transactions between multiple currencies. This will open the door to new use cases like cross-border payments and more complex financial deals.

Fnality International is slowly building the future of institutional finance using blockchain-based settlement solutions. Its latest earmarking feature makes transactions safer and more reliable for big banks.

With strong backing from global banks and new funding in place, Fnality is well-positioned for further growth. The upcoming US launch and multi-currency capabilities could turn it into a key player in the world of tokenized finance.