The US Federal Reserve revealed that it will launch its FedNow payment service in mid-2023. On 29 August, the Fed issued a press release stating that the instant settlement service will be ready between May and July. A trial period for the service will also begin this month.

FedNow is an instant payment service that is accessible 24/7, 365 days a year, throughout the United States. It will be released in phases, with the first phase focusing on clearing and settlement.

The Federal Reserve wants through this service to be adapted to changing times and the renewed needs of citizens.

Within the crypto sector, it recently published guidelines for the opening of accounts by cryptocurrency companies. At the moment, ‘Reserves Banks’ bank accounts allow institutions direct access to the Fed’s payment systems.
Without this access, companies must work with partner banks that have master accounts.

A number of US-based cryptocurrency companies offering new products and cards are pushing for direct access to the master bank in order to eliminate the need for intermediary partnerships with conventional banks.

With this in mind, the Federal Reserve has decided to create a standardisation of the application procedure for access to the Reserve Banks.

The guidelines are not legally binding rules, but they seem to provide clear room for manoeuvre for cryptocurrency traders seeking access to the main account, as institutions with federal deposit insurance will be subject to a more streamlined process, ‘while institutions that engage in new activities and for which the authorities are still developing appropriate supervisory and regulatory frameworks’ will be subject to more intensive reviews.

Although this is therefore a stance by the Fed to benefit the crypto sector, it seems that not everyone is happy about cryptocurrency custodian banks being granted direct access to the master account, as it is believed that they assume greater risk to the payment system and financial markets.

Regarding the next steps, Fed Governor Michelle Bowman warned that although the guidelines provided ‘transparency and consistency’, they were ‘only the first step in providing a consistent process’ and hinted that the Fed and the reserve banks would not be in a hurry to process the cryptocurrency industry’s applications.

Meanwhile, in 2021 Circle filed an application with the US Securities and Exchange Commission (SEC) to become a national bank, while Paxos applied for a national bank charter with the Office of the Comptroller of the Currency (OCC).