Federal blockchain payment system Fnality seeks Federal approval for operation in 2021
In the rapidly evolving world of crypto and banking, Fnality International continues to make strides in its mission to revolutionise institutional payments. The UK-based company, backed by 20 global financial institutions including Santander, is seeking approval from the Federal Reserve for its Dollar Fnality Payment System.
The system, a tokenized settlement platform for institutions, is designed to utilise central bank reserves to settle transactions, a preference among global regulators for reducing counterparty risk. Fnality's Sterling Fnality Payment System (£FnPS) went live 15 months ago, with three banks - Lloyds, Santander, and UBS - already live on the platform and making their first transactions six months ago. The Bank of England has deemed Fnality's approach to scaling £FnPS as meeting its operational and supervisory expectations.
The US market is a priority for Fnality, and the company aims to receive Federal Reserve approval for its Dollar Fnality Payment System later this year. However, the current status of Fnality's application remains unclear, with no official announcements regarding the timeline for approval from either the Federal Reserve or Connecticut regulators. A public hearing on Fnality's submission for an innovation bank charter was held in March 2025, but no updates have been made public since then.
The regulatory environment for innovation, including stablecoins and bank custody of crypto assets, is evolving but remains cautious, with a focus on anti-money laundering. The Federal Reserve has signalled a more open stance towards crypto-related banking services, but no specific approvals for firms like Fnality have been announced yet.
In other developments, Fnality is scaling its £FnPS operations in a managed and phased approach to ensure system resilience and functionality in a live environment. The company could be an important potential participant in the UK's Digital Securities Sandbox, which could accelerate matters, particularly as it will host the issuance of the planned digital gilts. If two currencies are live by the end of the year, it will open up additional interesting potential use cases for foreign exchange and FX swaps.
For the most current and specific status on Fnality's applications, direct inquiry to Fnality, the Federal Reserve, or the Connecticut Department of Banking would be necessary. A comprehensive report on bank-issued stablecoins and tokenized deposits, featuring more than 70 projects, can be found here.
As Fnality continues to navigate the regulatory landscape, its potential to bring about significant changes in the financial industry remains a topic of interest and anticipation.
