Nasdaq is among the shareholders of Fnality. Source: iStock/zodebala

Fnality International, a technology firm founded in 2019, with fifteen major financial firms, including ING, Nasdaq, UBS, Barclays, as shareholders, aims to roll out its payment system this year, launching the first ‘version’ of its USC token.

As previously reported, Fnality was estimated to become operational in 2020, and Chief Commercial Officer (CCO), Olaf Ransome, told Cryptonews.com that this is indeed the plan.

The company is working on a blockchain-powered digital payment system, that can be likened to distributed Financial Market Infrastructure (dFMI), and it will be called “Finality Global Payments.” “Finality will just be the provider of the platform. So we won’t be involved. We’re not a party to any movement of money. We are building a payment system for wholesale markets,” explained the CCO.

Furthermore, the company will have individual Fnality payment systems in each currency, and the payment asset will be a token called “USC.” It will initially be available in five currencies, as the company’s document explains in detail: CAD, EUR, GBP, JPY, and USD. However, it is still not known which one will go first or when exactly, but they’ll certainly go out one by one, as five at once is too complicated.

It’s a pre-paid system: for Fnality users, Global Payments will fund their account in any currency available at that moment – funds which can be taken out at any time – and for every unit of USC in circulation, there’s a corresponding amount of collateral in that fiat currency. “So, if there’s a billion pounds’ worth of USC in circulation, there’s a billion pounds at the Bank of England.”

The words ‘coin’ and ‘cryptocurrencies’ invite regulatory scrutiny, and businesses want to disassociate themselves from it. In Fnality’s case, they had previously used ‘coin’ in their USC (‘utility settlement coin’) as “it was a cool thing to use” when they needed a project name, but now use “USC” strictly.

This is how the company explains its product:

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The company is now working to get the necessary regulatory approvals, and while the dialogue with the regulators is great, he finds, it’s still a somewhat new territory. “We might get the first central bank to say ‘yes’ sometime in the third quarter and get the first bits of activity up in the back-end of the year,” said Ransome. Until the first currency is out and the first use cases connected, Fnality, that raised USD 63 million, is not making any money.

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In the best case, CCO concludes, by the end of 2020, Fnality will have the first currency live and initial business activity amongst the shareholders, which will come from their first use cases. Once they get through the first use cases, “four ingredients” will be added in the to-be-determined amounts: more currencies, more legal entities from the shareholders, more participants who are not shareholders, and more business applications or use cases.

What Fnality thinks will happen in the securities markets is that a whole sequence of events, their order, and communication between participants will change: the trades will probably be pre-cleared and settle almost instantly, and from Fnality’s perspective, “we’ll pick up those instructions from the exchange and not from the participants. […] While today you might do ten things, you’ll only have to do two things.”

Building infrastructure

Blockchain has been a fantastic catalyst for progress, finds the CCO. “The reason we’ve ended up with this Fnality construct from the fifteen institutions supporting it is because at a very basic level, people are reasonably firm in their convictions that markets will tokenize so that DLT [distributed ledger technology] or blockchain, whatever you want to call it, will get adopted,” said Ransome. “One of the beauties of the DLT set up is it takes away some of this duplication of effort of everybody checking the same thing.”

Fnality’s role is to build good roads, as it’s the roads that remain while the buildings around them change. A goal here is to build an infrastructure that wouldn’t consume all the revenues, but boost returns.

The banks have realized that the tokenization is happening, that new exchanges appeared, and a means of payment is needed – this changes how assets become available and a tradable. “The banks have the task of thinking thoughtfully about that infrastructure.”

Also, as reported, Fnality joined the newly formed Blockchain Expert Policy Advisory Board (BEPAB) of The Organisation for Economic Co-operation and Development (OECD). There were several people at the first session in December, Ransome said, who are “central bankers from countries who are in the euro” and “are interested in what we’re doing with the ECB European Central Bank] because they’ve got to approve what the ECB sets up, so they and OECD have provided an opportunity for us to do that.”

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