During the Crypto Asset Conference earlier this week, Luis Nacarino from Santander said that Fnality was aiming to “receive Federal Reserve approval later this year.” Fnality is backed by 20 global financial institutions, including Santander. It operates a tokenized settlement system for institutions, in which the shared payment tokens are backed by central bank reserves.
We asked Fnality about its US regulatory status and a spokesperson responded via email:
“Fnality is in the process of securing an innovation bank charter from the Connecticut Department of Banking and has applied for a joint account with the Federal Reserve which would be used to operate the Dollar Fnality Payment System($FnPS). In March 2025, a public hearing was held on Fnality’s submission for an innovation bank charter. The US is a priority market for us and our aim is to go live as soon as possible, subject to regulatory approval.”
In August 2022, the UK’s Treasury deemed Fnality a systemically important payment institution. The UK approval to go live took years longer than originally anticipated. But there are several reasons why the US one might progress faster.
Firstly, global regulators strongly prefer securities settlement using central bank money because it reduces counterparty risk. Yesterday ICE, the parent of the New York Stock Exchange, said it plans to use stablecoins. With the appropriate regulatory regime for bankruptcy, stablecoins may be better than commercial bank money. But central bank money is always considered optimal for securities settlement. Hence, regulators now have an added urgency to get something like Fnality in play sooner rather than later.
Fnality International’s founding CEO Rhomaios Ram stepped down last year and was replaced by Michelle Neal, who joined from the New York Federal Reserve earlier this month.
And of course, the Trump administration is very supportive of innovation.
Need for speed
The change in administration has already triggered considerable activity with three major US announcements this week – the ICE stablecoin announcement; Fidelity’s plans to issue a tokenized money market fund and a stablecoin; and the CME will offer a DLT-based solution, most likely to enable tokenized collateral to meet intraday margin requirements. This flurry of activity might be just the start.
Based on the Frankfurt Crypto Asset Conference, it appears to be providing some impetus elsewhere.
Meanwhile, during the conference, Santander’s Luis Nacarino confirmed that three banks are live on the Sterling Fnality Payment System (£FnPS) – Lloyds, Santander and UBS, who made their first transactions six months ago. Fnality first went live 15 months ago.
The Bank of England was keen to make sure that Fnality scaled conservatively. So we asked Fnality whether there were any regulator limits on the number of banks that can participate. The spokesperson responded:
“Fnality is scaling £FnPS operations in a managed and phased approach, ensuring system resilience and functionality in a live environment. This approach meets the operational and supervisory expectations of the Bank of England; any limits set do not relate to the number of banks that are active.”
“Fnality has a strong pipeline of participants who are onboarding and looking to take advantage of key use cases – spanning repo through margin transactions.”
We’d also observe that Fnality is 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.
Stepping back, if there are two currencies live by the end of the year, it will open up additional interesting potential use cases for foreign exchange and FX swaps.
Ledger Insights Research has published a report on bank-issued stablecoins and tokenized deposits featuring more than 70 projects. Find out more here.
