The Fed Incorporates Dropp, a DLT-Based Micropayments Platform, into FedNow Service

The Fed Incorporates Dropp into FedNow Service

The Federal Reserve has integrated Dropp, a micropayments platform based on Hedera and using distributed ledger technology (DLT), into its newly launched FedNow service. FedNow aims to strengthen digital payments infrastructure by connecting financial institutions, businesses, and service providers. Dropp is expected to facilitate low-fee payments, handle incoming payments, and process various customer credit transfers.

Intensifying Regulatory Landscape in the US Crypto Domain

The Federal Reserve recently introduced the “New Activities Supervision Program” to monitor banks’ crypto activities.
The Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) have been targeting major crypto exchanges like Binance and Coinbase.

The Federal Reserve Contemplates Cryptocurrency Impact

Both Chairman Jerome Powell and Vice Chairman Lael Brainard have expressed their concerns. Powell emphasizes the need for strong oversight on stablecoins, considering them as real money and emphasizing the importance of central bank backing for credibility. Brainard highlights the limitations of current laws in addressing cryptocurrency nuances, advocating for crypto-specific regulations to protect financial integrity and investors. While the Federal Reserve influences monetary policy, the direct regulation of cryptocurrencies mostly lies with the US Treasury and the SEC. Nevertheless, the Federal Reserve’s insights play a crucial role in shaping a comprehensive regulatory framework for the US crypto industry.

Hot Take

The Federal Reserve’s adoption of Dropp and its discussions on cryptocurrency implications demonstrate the growing importance of digital assets in the financial landscape. As the US regulatory landscape intensifies, it is crucial to strike a balance between oversight and innovation to foster a safe and thriving crypto industry. The collaboration between traditional financial institutions and emerging blockchain platforms, like Dropp, can drive the advancement of digital payments and pave the way for a more inclusive and efficient financial ecosystem.