Metal Blockchain has announced its integration with the Federal Reserve’s upcoming instant payment service, FedNow. The integration will enable Metal users to instantly convert funds to stablecoin and vice versa using FedNow’s “send/receive” function.
FedNow is a payment system developed by the United States Federal Reserve, facilitating round-the-clock, near-instant payments between banks. Presently, U.S. residents can only make instant domestic payments through third-party apps like PayPal, Venmo, or crypto wallets. The Federal Reserve plans to launch the new service in July.
Metal Blockchain, a crypto network developed by Metallicus, is based on a fork of Avalanche’s code. It aims to provide compliance-friendly options for decentralized finance (DeFi) developers. Metal developers state that the network is built with a foundation of Bank Secrecy Act (BSA) compliance, implying the inclusion of identity verification and Anti-Money Laundering features.
Metal Blockchain’s integration with FedNow paves the way for interconnected “bank chains,” creating a secure blockchain ecosystem without reliance on oracles. Banks will be able to communicate with each other for payment processing and settlements while remaining connected to the FedNow system. The integration will also enable banks to prepare for future central bank digital currencies (CBDCs) and facilitate the interaction of bank-issued stablecoins within a basket of stablecoin currencies.
While the criteria for integration with FedNow are unclear, Metal’s listing as a service provider suggests its compliance with the Bank Secrecy Act, as most blockchain networks utilize pseudonymous addresses that may not align with the Act’s requirements.
Metallicus co-founder and CEO, Marshall Hayner, believes the integration will address concerns regarding CBDCs, stating that the same level of scrutiny applied to the banking system will be applied to CBDCs as well.
Although FedNow has faced criticism from some U.S. politicians, alleging that it is a stepping stone towards a blockchain-based CBDC that infringes on privacy, the Federal Reserve has denied any association between FedNow and a CBDC.