FedNow, a digital payment system of the Federal Reserve, is due for its long-awaited debut in July, 2023. With the promises of facilitating instant transactions between banks, FedNow is producing ripples of anticipation in the U.S. financial market.
In a recent press release on June 29, 2023, Thursday, the Federal Reserve released a list of 57 certified “early adopter” organizations of FedNow system. However, in a surprising turn of events, the list contains no mentions of blockchains, despite having two networks previously announcing their potential integration with the payment system.
The Federal Reserve Financial Services also shared the latest announcement on their official Twitter handle on June 30, Friday. The tweet mentioned these early adopters have already completed their final trial runs and certification for FedNow before its initial launch planned for late July.
The #FederalReserve announced a group of 57 early adopters performing final trial runs on the #FedNow Service to confirm readiness to support live transactions before service launch in late July. Read more: https://t.co/NSPfHeIXNU #instantpayments #payments #fintech #banking pic.twitter.com/ArSHqMVHum
— Federal Reserve Financial Services (@FRBservices) June 30, 2023
Although the project is taking time to flourish, FedNow is the first digital payment system developed by the U.S. government. This upcoming service will enable companies, and banks to execute instant payments around-the-clock any day of the year.
The Federal Reserve’s plans for FedNow were first announced in 2019 to alleviate the limitations of the current U.S. electronic payment scenario. Bank transfers in the U.S. are still carried out by Automated Clearing House (ACH) and wire systems that do not process transactions instantly.
With FedNow, the Federal Reserve claims to provide a real-time payment platform that is on par with the United Kingdom’s Faster Payments system and Europe’s Single Euro Payment Area (SEPA) system. Moreover, in the future, FedNow aims to work alongside popular money transfer apps like Venmo, Apple Pay, and Cash App.
Amidst its growing popularity, the Fed is being speculated by critics to have plans of replacing cash or creating a central bank digital currency (CBDC). However, the Fed cleared these assumptions on its official website saying, “The FedNow Service is neither a form of currency nor a step toward eliminating any form of payment, including cash.”
FedNow’s Previous Commitments with Blockchain Networks
Before its planned launch, FedNow was successful in onboarding at least two renowned blockchain networks. In light of this, the complete lack of blockchains in FedNow’s new list of early adopters has surprised crypto users worldwide.
Tassat Group Inc., was the first blockchain that announced its potential integration with FedNow service on March 14, 2023. The network excels in providing blockchain-based business-to-business (B2B) instant payment services to commercial banks. Tassat said it will employ its client-facing application programming interface (API) to serve as a B2B on-ramp to FedNow service when it launches.
Although the blockchain operator is still listed in the FedNow official website’s “Service Provider Showcase,” it made no appearance amongst certified early adopters.
Metallicus’s Metal blockchain, a crypto network derived from a fork of Avalanche’s code, also declared its collaboration with FedNow. The blockchain network shared the news of this alliance on May 11, 2023. As per the announcement, this integration will enable Metal users to leverage the “send/receive” facility of the upcoming FedNow service for instant conversion of cash into stablecoins or vice-versa.
When the declaration was made, Metallicus was a FedNow Service Provider Showcase Participant, though the listing was removed from the official website within a few days of the announcement. Based on an update, despite not being mentioned in the certified adopters’ list, Metallicus still plans to move forward with the integration once it is successful in securing a bank sponsorship.
The exclusion of these blockchains from the recent list was unprecedented. However, as per the official press, the Federal Reserve aims to onboard around 10,000 U.S. financial institutions for designing a robust network. Hence, there are still chances for Tassat, Metallicus, and other service providers to join FedNow later this year, and even after 2023.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
Source: https://www.thecoinrepublic.com/2023/07/16/fednows-certified-adopters-list-lacks-blockchain-networks/