London-based financial technology firm Fnality International Ltd., which builds blockchain systems that tokenize major currencies for central banks, said today that it has raised $95 million (£77.7m) in a funding round led by Goldman Sachs and BNP Paribas.

The Series B funding round also attracted participation from DTCC, Euroclear, Nomura and WisdomTree. Existing investors from the company’s Series A round in 2019 of $63 million also joined in the round including many notable banks: Banco Santander, BNY Mellon, Barclays, CIBC, Commerzbank, ING, Lloyds Banking Group, Nasdaq Ventures, State Street, Sumitomo Mitsui Banking Corporation and UBS.

Tokenization has become a progressive topic for digital payments in the banking sector for decentralized ledger technology. Assets, such as currency, are represented as digital currencies such as Ethereum so banks can take advantage of blockchain systems. Blockchains use widely distributed ledgers protected by cryptographic keys that make them almost tamperproof and provide near-instant transactions along with an auditable record of historical transactions. Proponents argue this makes them perfect for the financial industry.

Using blockchain technology, also known as decentralized ledger technology, financial companies can reduce the time it takes to make international finance transfers of currency and assets from days or hours to mere minutes. It also reduces the amount of paperwork and human touch required and lessens the potential for error because the record of the token transaction occurs on the blockchain network itself becoming an indelible fact that can be audited afterward.

Fnality Chief Executive Rhomaios Ram said the new funding represents confidence in the financial sector for the technology and the trajectory it’s taking to change financial systems of account. That includes becoming a bridge between traditional finance and decentralized finance, or systems that use blockchain technology to eschew banks and middlemen entirely using software for peer-to-peer transactions between individuals managed by software.

“Each Fnality Payment System utilizes DLT to provide a 24/7 payment rail with the ability to reduce settlement cycles to near-real time, while significantly improving intraday liquidity management and marking significant innovation in the speed, functionality, and resilience of wholesale payments,” said Ram.

This funding follows Fnality piloting multiple projects proving the efficacy of its technology including launching a pilot program that tokenizes securities in collaboration with two European banks and three U.K. fintech companies. In October 2022 it also launched a proof-of-concept pilot program for currency settlements using the blockchain that executes between banks in under 10 seconds.

The company said it’s preparing for the inaugural commencement of its Sterling Fnality Payment System, which will open a tokenized currency settlement system for tokenized currencies backed by central banks, pending regulatory approval.

“Fnality’s application of blockchain technology offers a resilient way for institutions to use central bank funds across a wide set of potential use cases, including instantaneous, cross-border, cross-currency payments, collateral mobility and security transactions,” said Mathew McDermott, global head of digital assets at Goldman Sachs.

Asset tokenization has continued to be a hot topic in the banking and blockchain industry in 2023 with banks and financial institutions, involving financial assets such as stocks, bonds and securities. Examples have included Untangled Finance, which raised $13.5 million for institutional-grade credit tokenization; Securitize LLC, a blockchain investment platform that tokenizes assets for investors; and digital asset custody firm Fireblocks Inc., which acquired BlockFold in September to support large banks to tokenize stocks, bonds and real estate into digital tokens on the blockchain.

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