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🌐Bank backed blockchain payment rail Fnality looking to raise £50m as it eyes digital euro 🌐
September 23, 2022
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Fnality, the institutional payment system backed by 15 banks and Nasdaq, is looking to raise another £50 million ($55m), as first reported by TheBlock.

Previously called the Utility Settlement Coin, Fnality tokenizes money in an account held at a central bank to enable institutions to settle transactions such as securities, intraday derivatives, or collateral exchanges. For the settlement of blockchain transactions, it provides low risk cash on ledger, one of the factors that have held up institutional DLT adoption because this enables atomic settlement or delivery versus payment.

Next month Fnality is scheduled to go live with its first currency, a tokenized British poundHM Treasury officially recognized it as a payment system at the end of August, and in February, the company conducted a pilot transaction with Natwest and one of its investors Santander. This is well timed as the UK plans to launch a sandbox for DLT-based financial market infrastructures (FMIs) next year.

A digital euro next?

Sources told Ledger Insights that Fnality is also actively working on a digital euro, which is reinforced by an investment earlier this year from Euroclear. However, different sources recently informed Ledger Insights that during the last three months, the European Central Bank had started canvassing banks about interest in a wholesale CBDC in addition to its active work on a retail CBDC.

When the company incorporated in 2019, it planned five currencies, Canadian Dollars, Euros, Pounds, Japanese Yen and US Dollars. On the dollar side, Fnality was one of several companies involved in the development of the DTCC’s blockchain settlement solution Project Ion.

Fnality is not short of cash

When Fnality announced its £50 million funding in 2019, the stated intention was always to raise additional funds as each currency is launched. That’s because each currency has a separate company that operates a central bank account and a distinct permissioned Ethereum blockchain network. 

Last year, Fnality lost £15 million ($16.6m) but still had £27 million ($30m) cash on hand at the end of the year, partly because it issued £21.7m ($24m) in convertible loan notes during 2021.

On top of the £27 million cash in the holding company Fnality International, Fnality UK also had £4.7 million. So it is raising funds from a relatively strong financial position.

How it works

The Bank of England opened the path to deployment when it gave the green light for omnibus bank accounts, which allow the co-mingling of funds from different entities for the purposes of wholesale settlement.

While Fnality sees itself as a payment system rather than a stablecoin company, there are parallels. While stablecoins are backed by Treasury securities and commercial bank account balances, Fnality’s currency tokens are backed by a central bank account. When a bank wants to tokenize money, it transfers money to the omnibus account and the equivalent amount is tokenized. If it wants to withdraw money, the tokens are burned and money is transferred from the omnibus account to the central bank account belonging to the bank.

Opening the path to DLT adoption

There have been at least four reasons for the slow institutional DLT adoption. One of them has been the lack of low-risk cash on ledger, which Fnality helps to address. The other reasons are falling away as well. 

What makes a useful network? Trading with two or three other institutions is unlikely to yield sufficient efficiencies. During the last year or so, many of the major international banks have started to build significant DLT teams, which means when a network is launched, there are more participants to trade with.

There’s also been a lack of integration with legacy systems, which is not yet resolved, but it’s starting to be addressed as the DLT teams are built.

The final piece of the puzzle is regulation. Some jurisdictions are clearer than others, such as France, Germany, Luxembourg and Switzerland in Europe, and Singapore and Japan in Asia. The UK’s FMI sandbox and the EU’s DLT pilot regime should help clarify the picture.

Arguably there’s been a fifth reason for slow DLT adoption, the challenges of creating and operating consortia. This leads on to Fnality’s backers: Banco Santander, Bank of New York Mellon, Barclays, CIBC, Commerzbank, Credit Suisse, Euroclear, ING, KBC Group, Lloyds Banking Group, Mizuho, MUFG Group, Nasdaq, SMBC, State Street and UBS.

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The future of Crypto x AI is about to go crazy.

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💠 Users set up personalized agents in < 3 minutes
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Need help getting started? Check out our knowledge base to get the info you need: https://veridao.freshdesk.com/support/solutions/articles/51000487052-what-are-the-nft-activation-steps

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Brinc Launches Web3 Accelerator with Octopus, XDC & IDA

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Learn more about the Web3 Accelerator program and apply now: https://www.brinc.io/stablecoin-accelerator/

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Musk Turns On Starlink to Save Iranians from Regime’s Internet Crackdown

Elon Musk, the world’s richest man and a visionary behind SpaceX, has flipped the switch on Starlink, delivering internet to Iranians amid a brutal regime crackdown.

This move comes on the heels of Israeli strikes targeting Iran’s nuclear facilities, as the Islamic Republic cuts off online access.

The former Department of Government Efficiency chief activated Starlink satellite internet service for Iranians on Saturday following the Islamic Republic's decision to impose nationwide internet restrictions.

As the Jerusalem Post reports, that the Islamic Republic’s Communications Ministry announced the move, stating, "In view of the special conditions of the country, temporary restrictions have been imposed on the country’s internet."

This action followed a series of Israeli attacks on Iranian targets.

Starlink, a SpaceX-developed satellite constellation, provides high-speed internet to regions with limited connectivity, such as remote areas or conflict zones.

Elizabeth MacDonald, a Fox News contributor, highlighted its impact, noting, "Elon Musk turning on Starlink for Iran in 2022 was a game changer. Starlink connects directly to SpaceX satellites, bypassing Iran’s ground infrastructure. That means even during government-imposed shutdowns or censorship, users can still get online, and reportedly more than 100,000 inside Iran are doing that."

During the 2022 "Woman, Life, Freedom" protests, Starlink enabled Iranians to communicate and share footage globally despite network blackouts," she added.

MacDonald also mentioned ongoing tests of "direct-to-cell" capabilities, which could allow smartphone connections without a dish, potentially expanding access and supporting free expression and protest coordination.

Musk confirmed the activation, noting on Saturday, "The beams are on."

This follows the regime’s internet shutdowns, which were triggered by Israeli military actions.

Adding to the tension, Israeli Prime Minister Benjamin Netanyahu addressed the Iranian people on Friday, urging resistance against the regime.

"Israel's fight is not against the Iranian people. Our fight is against the murderous Islamic regime that oppresses and impoverishes you,” he said.

Meanwhile, Reza Pahlavi, the exiled son of Iran’s last monarch, called on military and security forces to abandon the regime, accusing Supreme Leader Ayatollah Ali Khamenei in a Persian-language social media post of forcing Iranians into an unwanted war.

Starlink has been a beacon in other crises. Beyond Iran, Musk has leveraged Starlink to assist people during natural disasters and conflicts.

In the wake of hurricanes and earthquakes, Starlink has provided critical internet access to affected communities, enabling emergency communications and coordination.

Similarly, during the Ukraine-Russia conflict, Musk activated Starlink to support Ukrainian forces and civilians, ensuring they could maintain contact and access vital information under dire circumstances.

The genius entrepreneur, is throwing a lifeline to the oppressed in Iran, and the libs can’t stand it.

Conservative talk show host Mark Levin praised Musk’s action, reposting a message stating that Starlink would "reconnect the Iranian people with the internet and put the final nail in the coffin of the Iranian regime."

"God bless you, Elon. The Starlink beams are on in Iran!" Levin wrote.

Musk, who recently stepped down from leading the DOGE in the Trump administration, has apologized to President Trump for past criticisms, including his stance on the One Big Beautiful Bill.

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GENIUS Act lets State banks conduct some business nationwide. Regulators object

The Senate passed the GENIUS Act for stablecoins last week, but significant work remains before it becomes law. The House has a different bill, the STABLE Act, with notable differences that must be reconciled. State banking regulators have raised strong objections to a provision in the GENIUS Act that would allow state banks to operate nationwide without authorization from host states or a federal regulator.

The controversial clause permits a state bank with a regulated stablecoin subsidiary to provide money transmitter and custodial services in any other state. While host states can impose consumer protection laws, they cannot require the usual authorization and oversight typically needed for out-of-state banking operations.

The Conference of State Bank Supervisors welcomed some changes in the GENIUS Act but remains adamantly opposed to this particular provision. In a statement, CSBS said:

“Critical changes must be made during House consideration of the legislation to prevent unintended consequences and further mitigate financial stability risks. CSBS remains concerned with the dramatic and unsupported expansion of the authority of uninsured banks to conduct money transmission or custody activities nationwide without the approval or oversight of host state supervisors (Sec. 16(d)).”

The National Conference of State Legislatures expressed similar concerns in early June, stating:

“We urge you to oppose Section 16(d) and support state authority to regulate financial services in a manner that reflects local conditions, priorities and risk tolerances. Preserving the dual banking system and respecting state autonomy is essential to the safety, soundness and diversity of our nation’s financial sector.”

Evolution of nationwide authorization

Section 16 addresses several issues beyond stablecoins, including preventing a recurrence of the SEC’s SAB 121, which forced crypto assets held in custody onto balance sheets. However, the nationwide authorization subsection was added after the legislation cleared the Senate Banking Committee, with two significant modifications since then.

Originally, the provision applied only to special bank charters like Wyoming’s Special Purpose Depository Institutions or Connecticut’s Innovation Banks. Examples include crypto-focused Custodia Bank and crypto exchange Kraken in Wyoming, plus traditional finance player Fnality US in Connecticut. Recently the scope was expanded to cover most state chartered banks with stablecoin subsidiaries, possibly due to concerns about competitive advantages.

Simultaneously, the clause was substantially tightened. The initial version allowed state chartered banks to provide money transmission and custody services nationwide for any type of asset, which would include cryptocurrencies. Now these activities can only be conducted by the stablecoin subsidiary, and while Section 16(d) doesn’t explicitly limit services to stablecoins, the GENIUS Act currently restricts issuers to stablecoin related activities.

However, the House STABLE Act takes a more permissive approach, allowing regulators to decide which non-stablecoin activities are permitted. If the House version prevails in reconciliation, it could result in a significant expansion of allowed nationwide banking activities beyond stablecoins.

Is it that bad?

As originally drafted, the clause seemed overly permissive.

The amended clause makes sense for stablecoin issuers. They want to have a single regulator and be able to provide the stablecoin services throughout the United States. But it also leans into the perception outside of crypto that this is just another form of regulatory arbitrage.

The controversy over Section 16(d) reflects concerns about creating a regulatory gap that allows banks to operate interstate without the oversight typically required from either federal or state authorities. As the two Congressional chambers work toward reconciliation, lawmakers must decide whether stablecoin legislation should include provisions that effectively reduce traditional banking oversight requirements.

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If you find value in my content, consider showing your support via:

💳 PayPal: 
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Dubai regulator VARA classifies RWA issuance as licensed activity
Virtual Asset Regulatory Authority (VARA) leads global regulatory framework - makes RWA issuance licensed activity in Dubai.

Real-world assets (RWAs) issuance is now licensed activity in Dubai.

~ Actual law.
~ Not a legal gray zone.
~ Not a whitepaper fantasy.

RWA issuance and listing on secondary markets is defined under binding crypto regulation.

It’s execution by Dubai.

Irina Heaver explained:

“RWA issuance is no longer theoretical. It’s now a regulatory reality.”

VARA defined:

- RWAs are classified as Asset-Referenced Virtual Assets (ARVAs)

- Secondary market trading is permitted under VARA license

- Issuers need capital, audits, and legal disclosures

- Regulated broker-dealers and exchanges can now onboard and trade them

This closes the gap that killed STOs in 2018.

No more tokenization without venues.
No more assets without liquidity.

UAE is doing what Switzerland, Singapore, and Europe still haven’t:

Creating enforceable frameworks for RWA tokenization that actually work.

Matthew White, CEO of VARA, said it perfectly:

“Tokenization will redefine global finance in 2025.”

He’s not exaggerating.

$500B+ market predicted next year.

And the UAE just gave it legal rails.

~Real estate.
~Private credit.
~Shariah-compliant products.

Everything is in play.

This is how you turn hype into infrastructure.

What Dubai is doing now is 3 years ahead of everyone else.

Founders, investors, ecosystem builders:

You want to build real-world assets onchain.

Don’t waste another year waiting for clarity.

Come to Dubai.

It’s already here.

 

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If you find value in my content, consider showing your support via:

💳 PayPal: 
1) Simply scan the QR code below 📲
2) or visit https://www.paypal.me/thedinarian

🔗 Crypto – Support via Coinbase Wallet to: [email protected]

Or Buy me a coffee: https://buymeacoffee.com/thedinarian

Your generosity keeps this mission alive, for all! Namasté 🙏 Crypto Michael ⚡  The Dinarian

 

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