FedNow Goes Live: Here’s Everything You Need to Know About the New Crypto Challenger

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The US Federal Reserve is ready to rewrite the rules of the game with the launch of its long-awaited FedNow payment service. The innovative service, which promises to enable real-time fund transfers around the clock, aims to revolutionize the nation’s payment ecosystem. Despite substantial opposition, the service is ready to go live, following the announcement of a July 2023 launch for the pilot program.

FedNow’s Story

FedNow’s inception in 2019 aimed to mitigate the delays in fund transfers, aligning the US with countries like the United Kingdom, India, Brazil, and the European Union, which already have similar systems in place. The service will debut with a robust list of 41 banks and 15 service providers, encompassing everything from community banks to banking behemoths like JPMorgan Chase and Bank of New York Mellon.

While FedNow is poised to compete with private payment systems, some concerns have been voiced. Critics argue that it is a surveillance tool being ushered in ahead of a fully operational Central Bank Digital Currency (CBDC). The debate intensifies among crypto communities, raising questions about a digital dollar’s potential impact on financial freedom and citizen privacy.

Read More: How the Federal Reserve, J.P. Morgan, and Ethereum Allegedly Conspired Against XRP

Blockchain Firms Left Out… But Why?

Interestingly, blockchain firms have largely been left out of the FedNow initiative, fueling speculation about the future interplay between blockchain and traditional banking systems.

Not all feedback has been negative, though. Anu Somani, Head of Global Payables and Embedded Payments at U.S. Bank, considers FedNow a “wonderful way of expanding reach.” Unlike peer-to-peer payment services, FedNow’s payments will settle directly in central bank accounts, mirroring the FedWire payment system currently used for large-scale corporate payments.

‘Banking’ on Flexibility

To soothe fears of potential bank runs, FedNow is introducing a maximum payment limit of $500,000 at launch. However, individual banks participating in the service can adjust this cap according to their specific needs.

Fednow has no relation with CBDCs

The U.S. Federal Reserve has stated that its upcoming instant fiat payment service, FedNow, is not a central bank digital currency (CBDC). Despite onboarding several institutions for testing, the Fed emphasizes that FedNow operates within the traditional fiat ecosystem and does not signal the imminent introduction of a CBDC.