The upcoming integration of the Federal Reserve’s instant payment service, FedNow, with Metal Blockchain has sparked discussions surrounding stablecoins, privacy, and the future plans of the financial system. According to a recent announcement from the Metal Blockchain team, this collaboration will allow Metal users to rapidly convert funds to stablecoin and back through FedNow’s “send/receive” function.
FedNow, developed by the United States Federal Reserve, enables near-instant payments between banks 24/7. However, at present, U.S. residents can only access instant domestic payments through third-party apps like PayPal and Venmo or cryptocurrency wallets. The Federal Reserve has announced that its new service will be launched in July.
Metal Blockchain is a crypto network developed by Metallicus and is based on a fork of Avalanche’s code. Designed to provide compliance-friendly options for decentralized finance (DeFi) developers, Metal developers claim that their network is “built on the foundation of the Bank Secrecy Act (BSA) Compliance.” This suggests that it has been developed with identity verification and anti-money laundering features in mind.
However, the criteria FedNow utilizes for integration with payment networks remain unclear. Considering that most blockchain networks employ pseudonymous addresses as user identities, they could be viewed as non-compliant with the BSA. This may explain why Metal is among the first blockchain networks listed as a FedNow service provider.
Marshall Hayner, Metallicus co-founder and CEO, spoke to Cointelegraph about the integration’s potential. He suggested that Metal’s integration with FedNow might facilitate the creation of interconnected “bank chains,” fostering a larger blockchain ecosystem that is secure and independent of oracles. This could enable banks to process payments and handle settlements in communication with one another while remaining connected to the FedNow system.
Furthermore, Hayner indicated that the integration would help banks prepare for a potential central bank digital currency (CBDC) as well as for “bank-issued stablecoins that can interact within a basket of stablecoin currencies.”
However, not everyone is on board with FedNow; certain U.S. politicians, such as Florida Governor Ron DeSantis and U.S. Presidential candidate Robert Kennedy Jr., have expressed concerns that it is a first step towards a blockchain-based CBDC they claim will infringe on privacy. The Federal Reserve has denied that FedNow has any connection to a CBDC.
When queried on the controversy, Hayner dismissed these criticisms of CBDCs, stating, “I believe this controversy is unfounded […] As the same rigor that is applied to the banking system will be applied to CBDC.”
Source: Cointelegraph
