On July 20, 2023, the US Federal Reserve officially launched FedNow, a fast payment service that was announced back in 2019. FedNow is a development that allows most banks to conduct settlements and quickly transfer funds from one account to another within the US financial system.
With the help of FedNow Americans will be able to pay for purchases in grocery stores or make money transfers, which will happen in seconds. It will also help to speed up the process of giving out salaries. Despite the seeming harmlessness, this news alarmed the crypto community. It's no secret that the Fed has been fighting against cryptocurrencies. Take SEC actions, for example – it brought nothing good into the Crypto World.
Learn more about FedNow
The FedNow ecosystem will be developed step by step. The July launch provided users with basic financial functionality. It includes transfers between accounts (A2A Payments) and bill payments.
The FedNow team has released a video describing the process of service operation in detail. It was told, that FedNow will be useful to small businesses. Since it will help them work without delays in financial management. Previously, it was almost impossible to make an instant transfer or cash a check on the same day.
According to the official video, the main advantages of the service are the security and speed of money transfers. All operations are carried out in real time with constant service support. At the moment, 35 American banks cooperate with the service.
Threat to the Crypto World
It may seem like the US authorities are not really supporting the Crypto World. The traditional financial system might be impressed and puzzled by the rapid development of blockchain systems, its effectiveness and influence in the world.
For instance, the US Treasury has repeatedly spoken against decentralized payments, considering cryptocurrency as a way of tax evasion. Recent SEC lawsuits against Binance and Coinbase also confirm the idea that cryptocurrency is becoming an eyesore for the centralized US authorities.
Who benefits from FedNow?
The American politician, representative of the Republican Party Ron Paul believes that the introduction of the FedNow system is served under the guise of benefits for people, but in fact it covers the power motives of the centralized market.
Former Congressman from Texas states:
“A Federal Reserve-run real payments system will crowd out private alternatives, leaving consumers with one government-run option for real-time payments. This will be bad for consumers and real-time entrepreneurs but good for power-hungry Federal Reserve bureaucrats who will no doubt use FedNow to help “protect” the Federal Reserve’s fiat currency system from competition from crypto currencies”.
Opinion of the Crypto World
Although the crypto community was a bit startled by the innovations of the US authorities, it did not express any special concerns in this regard. For now, there is no real confirmation that FedNow will be able to work as stably and efficiently as blockchain-based cryptocurrencies.
Leading crypto specialist and head of Gresham International Cal Evans shared his opinion about FedNow. He said that now the US authorities are trying to at least catch up with Crypto World, after years of downplaying it.
In general, everyone agrees that the new payment service from the Fed, despite the declared convenience and functionality, still cannot compete with cryptocurrencies. Because of one simple reason – banking operations passing through the FedNow service are centralized and may be subject to external censorship by authorities. The cryptocurrency industry is more advantageous in this regard: it continues to defend the position of decentralized trading. Blockchain, unlike traditional economic systems, is transparent, which is why it is so attractive to freedom-loving investors.
What do you think about FedNow service? Share your experience in the comments!
If you want to learn more interesting facts about crypto then check out our blog! You might like our articles “Ripple Won the Case Against the SEC” and “What SEC Is and How It Affects Crypto”.
