As Bruce WIlds noted earlier in the week, The Fed has stated that FedNow is not intended to kill or replace other money transfer options like Venmo, Cash App, PayPal, or Zelle. Instead, it is designed to work alongside the current systems built by the private sector. Still. FedNow could rapidly become a game changer. Money.com notes this FedNow is launching soon. FedNow was scheduled to begin formal certification of participants of the program in April 2023, with a formal launch planned for July 2023. It will operate on a 24-hour, 365-days-a-year basis,
This new system differs from consumer-facing apps which allow instant peer-to-peer payments, FedNow won’t be an app per se. It’s more designed to allow banks to move money instantly. More than 50 financial institutions are “early adopters” of FedNow, some of the notable banks that will use FedNow include JPMorgan Chase, Wells Fargo, and Peoples Bank.
FedNow will only be available to customers of the banks that choose to implement FedNow. The Fed says all 10,000 or so banks that are regulated by the Fed can join but will not be required to do so. The claim is that, for everyday people, FedNow could make managing money much easier and faster. It would allow you to pay your mortgage bill on Christmas Day without worrying about it being delayed or late because of the holiday.
This also means that transferring money between, say, your checking and savings accounts at different banks could be done instantly. Even gig workers like Uber drivers could get paid immediately after each completed ride. It also means a record of every transaction that occurs will be put on "record." In short "big-brother" will know everything you do, your preferences, and how you live your life. To many of us, this amounts to an invasion of privacy.
And now, as The Fed prepares to unleash their new service, they seen to reassure the public.
As Arjit Sarkar reports at CoinTelegraph.com, The US Federal Reserve clarified that its new service for instant payments between organizations — the FedNow Service — has no relation with central bank digital currencies (CBDCs).
The Fed certified the FedNow Service as “ready” after it onboarded 41 financial institutions, 15 service providers and the U.S. Department of the Treasury to test the system before its launch by the end of July 2023. However, the central bank had to clarify that the promise of instant fiat payments and real-time gross settlement (RTGS) is not powered by a CBDC.
In a tweet, the Fed stated that FedNow Service is similar to other payment services, such as Fedwire and FedACH, which work within the boundaries of the fiat ecosystem. It said:
“The FedNow Service is not related to a digital currency. The FedNow Service is a payment service the Federal Reserve is making available for banks and credit unions to transfer funds for their customers.”
The Federal Reserve further confirmed that it has not yet decided on issuing the highly anticipated CBDC and “would only proceed with the issuance of a CBDC with an authorizing law.”
The table above highlights the initial list of participants. However, the Federal Reserve plans to onboard all 10,000 U.S. financial institutions in time to come.
On May 11, the Fed announced the integration of Metal Blockchain into the FedNow Service.
Metal Blockchain’s listing in the FedNow Service provider showcase. Source: FedNow
Metal Blockchain is a crypto network developed by Metallicus based on a fork of Avalanche’s code. According to its documents, the network features a subnet called X-Chain that allows developers to enact rules for transferring assets. For example, a token can be issued with the rule that it “can only be sent to US citizens” or “can’t be traded until tomorrow.”
We give the last word back to Bruce Wilds, who argues that FedNow is another step towards more control over the individual. Twenty minutes into this video by Coin Bureau the narrator takes the stand that FedNow truly seems to be a Trojan Horse to usher in a CBDC system.
It points out that while not everyone will choose to "opt-in" and adopt such a system, it will appear benign to most people and rapidly be accepted. Even those that resist will find the government will most likely force them to use it when dealing with official agencies.