FedNow to be integrated with Metal Blockchain for instant payment – Cryptopolitan

The Federal Reserve’s upcoming instant payment service, FedNow, is set to integrate with the Metal Blockchain, according to a May 11 announcement from the Metal Blockchain team. This integration will enable Metal users to instantly convert funds into stablecoins and vice versa, using FedNow’s “send/receive” feature.

Understanding FedNow and Metal Blockchain

FedNow, a creation of the US Federal Reserve, aims to provide a seamless platform for banks to make instant, 24/7 payments between themselves. US citizens can only make such quick domestic transactions through alternative services such as PayPal, Venmo or cryptocurrency wallets. The long-awaited FedNow system is set to be introduced in July.

Metal Blockchain, a crypto network created by Metallicus, is based on a fork of Avalanche’s code and was developed to provide compliance-friendly options for decentralized finance (DeFi) developers. The network is reportedly built on the foundations of Bank Secrecy Act (BSA) compliance, suggesting that it has integrated identity verification and anti-money laundering features.

The network has an “X-Chain” subnet that allows developers to implement rules for transferring assets. This means that tokens can be issued with specific conditions, such as being sent only to US citizens or not being traded before a certain date.

However, most blockchain networks use pseudonymous addresses as user identities, potentially making them non-compliant with BSA. This may be why Metal is among the first blockchain networks to be listed as a FedNow service provider.

The Future of Interconnected “Banking Chains”

Metallicus CEO and co-founder Marshall Hayner suggested that Metalus’ integration with FedNow could facilitate the creation of interconnected “bank chains,” leading to a more comprehensive, secure blockchain ecosystem that doesn’t rely on oracles.

This will enable banks to communicate and process payments and settlements while still connected to the FedNow system. Hayner also stated that the integration will help banks prepare for a potential central bank digital currency (CBDC) and enable “bank-issued stablecoins that can interact within a basket of stablecoin currencies.”

FedNow has faced criticism from some US politicians, such as Florida Governor Ron DeSantis and US presidential candidate Robert Kennedy Jr., who argue that the system is a stepping stone to a blockchain-based CBDC that could violate privacy. The Federal Reserve has denied any connection between FedNow and a CBDC. When asked about the controversy, Hayner dismissed these concerns, stating that the same rigor that applied to the banking system would be applied to CBDCs.