FedNow Expands Toward Cross-Border Payments Without Using Stablecoins

FedNow expands toward cross-border payments using U.S. dollars and correspondent

The Federal Reserve’s FedNow instant payment service is moving toward cross-border payment capabilities without relying on stablecoins, according to Coin Bureau.

Under the planned framework, FedNow would handle the U.S. portion of an international payment in dollars, while correspondent banks would manage the overseas portion. The structure would allow financial institutions to connect FedNow’s domestic instant-payment infrastructure with existing international banking arrangements.

Federal Reserve Financial Services said on September 23 that FedNow is preparing to support cross-border transaction use cases, describing the development as a first step toward serving financial institutions and customers with international payment needs.

FedNow to Handle the U.S. Leg of Cross-Border Payments

FedNow currently provides participating banks and credit unions with the ability to send and receive payments within seconds, operating 24 hours a day, seven days a week.

The Federal Reserve has been working on changes that would allow participants to use intermediaries, including correspondent banks, for the international portion of a transaction while FedNow processes the U.S. domestic leg.

A Federal Reserve proposal published in April said the changes could support private-sector cross-border payment solutions by allowing FedNow participants to leverage intermediaries for international transfers. The proposal specifically described a model in which FedNow would be used for the U.S. domestic portion while a correspondent bank handles the international portion.

The approach differs from a fully integrated international payment network. Instead, it connects FedNow's real-time U.S. infrastructure with established correspondent banking relationships outside the country.

Stablecoins Face a Different Payment Model

Coin Bureau said the development places stablecoins in direct competition with a regulated banking-based alternative for faster cross-border payments.

FedNow itself is not a stablecoin settlement network. The service is an interbank payment infrastructure operated by the Federal Reserve, with transactions involving participating financial institutions.

The development comes as U.S. regulators are also establishing a framework for payment stablecoins. On September 24, the Federal Reserve Board requested public comment on proposals related to stablecoin issuers supervised by the Board under the GENIUS Act. The proposals address reserve assets, capital requirements and risk-management standards for covered issuers.

Cross-Border Capability Moves Closer

The Federal Reserve’s April proposal marked a shift from FedNow’s original domestic-only structure. The Federal Reserve said the service initially supported only domestic instant payments but that industry participants had expressed interest in using it for cross-border transactions.

Federal Reserve Financial Services said participants could begin making the necessary ISO 20022 changes later in 2026 to support international payment use cases.

The planned structure therefore leaves the international markets leg with correspondent banking institutions while using FedNow for the U.S. side of the transaction, rather than replacing the cross-border banking system with stablecoin infrastructure.

Writer: Victoria Hale
Technology & Blockchain Writer

Victoria Hale writes about blockchain technology, digital infrastructure, and the intersection of emerging technologies with finance. Her articles explore how new protocols and systems are shaping the evolving digital economy.

She prioritises clarity and accuracy when explaining technical developments to a general audience.