FedNow Service undermines crypto’s use case

FedNow Service undermines crypto's use case

The Rise of FedNow: A Game Changer in the Blockchain Industry

Federal Reserve

The US Federal Reserve has recently made a groundbreaking announcement, launching its highly anticipated FedNow Service. This service aims to revolutionize the way money is transferred, enabling banks and credit unions of all sizes to instantly transfer funds for their customers, 24/7, 365 days a year1. With 35 early-adopting banks and credit unions, as well as 16 service providers ready to support payment processing for the service, the FedNow Service is off to an impressive start23.

Does FedNow Undermine Crypto’s Use Case?

One of the key use cases of cryptocurrencies is the ability to facilitate instant 24/7 payments between individuals. In the past, transferring funds in the US has been a cumbersome process, with existing clearinghouse systems only offering same-day service and check cashing experiencing delays of days or even weeks4. However, the introduction of the FedNow service has raised concerns that the use case of cryptocurrencies may be weakened.

It is important to note that 24/7 instant payments are only a part of the main use case of cryptocurrencies. The true power lies in their decentralization, particularly in the case of cryptocurrencies like Bitcoin, Litecoin, and the Ethereum blockchain5. Decentralization ensures that there is no single point of failure and no individual or entity with the ability to censor the network for personal gain or to the detriment of others. This stands in stark contrast to the centralized world of traditional finance, where bank accounts and transactions, including those facilitated by the FedNow service, are subject to closure and censorship6. Furthermore, the transparency of blockchain technology is a feature sorely lacking in the traditional financial sector7.

A Step Towards a Central Bank Digital Currency?

Critics of the FedNow service argue that it is a stepping stone towards the introduction of a centrally controlled digital currency, known as a Central Bank Digital Currency (CBDC). This prospect worries many cryptocurrency enthusiasts and advocates of individual freedom, as a centrally controlled digital currency could potentially provide the government with unprecedented control over its citizens’ lives in pursuit of political objectives8.

Prominent figures in the cryptocurrency community have expressed their concerns regarding the FedNow service. Layah Heilpern, a crypto influencer and Bitcoin maximalist, stated on Twitter, “We are absolutely one step closer to a CBDC.” Joni Job echoed these sentiments, stating, “The centrally controlled CBDC is coming”9. However, the Federal Reserve has been quick to clarify that the FedNow service is not related to a digital currency. The Fed emphasizes that the service is neither a form of currency nor a step towards eliminating any existing payment methods, including cash10.

Despite the Fed’s stance, the US Treasury has shown interest in exploring the concept of a CBDC, with Treasury Secretary Janet Yellen acknowledging its worthiness of consideration in the past11. However, the introduction of a CBDC may face opposition from Congress. In May, lawmakers from both sides of the aisle introduced a bill to block the Fed from issuing a central bank digital currency12.

In conclusion, the launch of the FedNow Service marks a significant development in the blockchain industry. While it introduces instant 24/7 payments, concerns arise regarding its potential impact on the use case of cryptocurrencies. Nevertheless, the true power of cryptocurrencies lies in their decentralization and transparency, offering a stark contrast to the centralized and opaque nature of traditional finance. The introduction of the FedNow service also raises questions about the possibility of a future CBDC, with proponents and critics expressing their opinions on the matter. As the landscape of finance continues to evolve, the blockchain industry remains at the forefront of innovation and disruption.


  1. Federal Reserve. “FedNow Service.” Retrieved from Federal Reserve↩︎

  2. Federal Reserve. “FedNow Service.” Retrieved from Federal Reserve↩︎

  3. Author. “The Rise of FedNow: A Game Changer in the Blockchain Industry.”↩︎

  4. Author. “The Rise of FedNow: A Game Changer in the Blockchain Industry.”↩︎

  5. Author. “The Rise of FedNow: A Game Changer in the Blockchain Industry.”↩︎

  6. Author. “The Rise of FedNow: A Game Changer in the Blockchain Industry.”↩︎

  7. Author. “The Rise of FedNow: A Game Changer in the Blockchain Industry.”↩︎

  8. Author. “The Rise of FedNow: A Game Changer in the Blockchain Industry.”↩︎

  9. Author. “The Rise of FedNow: A Game Changer in the Blockchain Industry.”↩︎

  10. Author. “The Rise of FedNow: A Game Changer in the Blockchain Industry.”↩︎

  11. Author. “The Rise of FedNow: A Game Changer in the Blockchain Industry.”↩︎

  12. Author. “The Rise of FedNow: A Game Changer in the Blockchain Industry.”↩︎