Fed’s “Crypto Killer” Fails to Disrupt the Market After One Year

FedNow, touted by the US Federal Reserve as a 24/7 instant payments solution and a potential "crypto killer," has not had the expected impact on the cryptocurrency market.

Despite the recent crash, the total market capitalization of cryptocurrencies has increased by 59% since FedNow’s introduction in 2023.

While the Federal Reserve never explicitly stated that FedNow would disrupt the crypto industry, its features closely mirrored those of blockchain technology. FedNow promoted benefits such as continuous operation, payment irreversibility, high transaction throughput, no chargebacks, and very low fees, which are also key selling points for many cryptocurrencies.

Although FedNow was initially thought to potentially overshadow cryptocurrencies, particularly stablecoins, it has not displaced them. The service’s transaction fee of $0.23 is competitive with that of major blockchains, irrespective of the transaction size.

The XRP community had high hopes that FedNow’s launch might boost Ripple’s blockchain, which has been marketed as ideal for interbank transfers and remittances. However, XRP has lost 25% of its value since FedNow’s debut.

Over the past year, FedNow has integrated over 900 financial institutions, though only 32 have been officially approved to handle payment processing. Mark Gould, the chief executive payments officer at Federal Reserve Financial Services, acknowledged that achieving widespread instant payment adoption is still a work in progress.