The Federal Reserve is preparing FedNow to support cross-border payments while keeping the international leg with correspondent banks, not on a blockchain. A day later, the Fed also requested comment on two proposals implementing the GENIUS Act for payment stablecoins. Together, the moves narrow the gap between conventional bank money and dollar tokens on the one feature stablecoins have long used to stand out: round-the-clock availability.
Federal Reserve Financial Services said on September 23 that FedNow is preparing cross-border transaction support and enhanced ISO 20022 messaging. The international portion of a payment will still depend on private-sector intermediaries such as correspondent banks; FedNow's job stays on the domestic side.
The Cross-Border Plan Started Months Ago
The move builds on groundwork from April, when the Fed Board proposed changing Subpart C of Regulation J so FedNow participants could use intermediaries other than Federal Reserve Banks. Under the existing rule, a FedNow funds transfer can include only two U.S. banks; the comment period on that proposal closed June 9.
Chief FedNow executive Nick Stanescu called the initiative a first step toward serving internationally active customers, noting that participating institutions had repeatedly flagged cross-border capabilities as a priority. FedNow is not becoming a global settlement network — it is making the U.S. side of an international payment faster.
Stablecoins Keep an Edge FedNow Can't Match
Stablecoins have offered continuous, always-on dollar transfers for years, moving between blockchain addresses regardless of banking hours. FedNow now brings a version of that availability to conventional bank money, but it cannot give a bank deposit the programmability of a token or let it move through smart contracts and tokenized markets. That leaves stablecoins with an edge in blockchain portability even as their 24/7 advantage becomes less distinctive.
The Fed Is Also Writing Stablecoin Rules
One day after the FedNow announcement, on September 24, the Board requested comment on two proposals implementing its GENIUS Act responsibilities. One would require Board-supervised payment stablecoin issuers to fully back tokens with permitted reserve assets, including short-term Treasury bills, plus standardized capital and custody rules. The other sets up an application process for Board-supervised banks seeking approval for subsidiaries to issue payment stablecoins.
Governor Michael Barr focused on redemption, saying stablecoins need to remain reliably and promptly redeemable at par even during periods of market stress. Reserve limitations and standardized capital requirements also factored into his support for the proposals.
Source: Crypto News Flash
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