Federal Reserve Announces Integration of FedNow With Metal Blockchain for Instant Payment

Jimmy Aki
Last Updated:

Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.

The Federal Reserve’s upcoming instant payment system, FedNow, is set to be integrated with the Metal Blockchain Network.

The new service, which is supposed to launch in July, has also attracted criticism from some U.S. politicians, alleging that it is a first step towards a blockchain-based CBDC that will infringe on privacy.

A New Development for Faster Transactions

The FedNow integration will allow the Metal Blockchain users to instantly change money into stablecoins and vice versa by employing its “send/receive” capability.

Based on a derivative of the Avalanche code, Metal Blockchain was created by Metallicus to give decentralized finance (DeFi) developers choices that are amenable to compliance.

The developers claim that the network is built on the foundation of BSA [Bank Secrecy Act] compliance, which ensures that the platform includes measures for identity verification and anti-money laundering.

In an interview with Cointelegraph, Marshall Hayner, co-founder and CEO of Metallicus, explained that FedNow’s integration with Metal Blockchain will result in a secure “bank chain” system independent of oracles.

He stated that by combining FedNow and Metal Blockchain, a secure ecosystem will be created to facilitate interbank communication for payment processing and settlement.

Furthermore, the FedNow system will remain linked to this ecosystem.

Hayner added that the connection would enable “bank-issued stablecoins” to communicate with a collection of stablecoin currencies and prepare banks for future central bank digital currencies (CBDC).

According to the Federal Reserve, the new service will debut in July, and a diverse mix of financial institutions of all sizes are prepared to use the network immediately.

Tom Barkin, president of the Federal Reserve Bank of Richmond and executive sponsor of the FedNow Program, noted that the launch demonstrates a significant turning point in the effort to help financial institutions serve their customers’ demands for instant payments.

He added that this would help better to support almost every aspect of the U.S. economy.

Criticism From Government Officials

Several American legislators, including presidential aspirants Ron DeSantis and Robert F. Kennedy Jr., have condemned FedNow, claiming that it is the first step toward a blockchain-based central bank digital currencies (CBDC) that will violate privacy.

The nephew of former president John F. Kennedy, Democrat RFK Jr., raised concerns about CBDCs in a thread on Twitter on April 11.

He described them as the ultimate tools for social control and surveillance while challenging the Fed’s assurances that FedNow wouldn’t be used to facilitate a CBDC.

The Federal Reserve, however, has downplayed rumors that the system would be connected to a CBDC.

It stated on April 8 that no decision had been taken to issue a CBDC and that it would only do so with unequivocal backing from Congress and the executive branch in the ideal form of specific authorizing legislation.

During a hearing before the House Committee on Financial Services in May, Lael Brainard, vice chair of the Federal Reserve, also emphasized that a CBDC would take much longer to get off the ground than FedNow.

Furthermore, Fed Chair Jerome Powell spoke before the House Financial Services Committee on March 9, where he noted that a prospective CBDC for the United States is still quite a ways off.

About Jimmy Aki PRO INVESTOR

Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works.