Fed’s Schmid says instant payments will overtake digital assets

What Schmid actually said

Schmid presented his views at an event at the Hoover Institution and reiterated them in interviews. His central argument is that real-time settlement is becoming the default for US payments, rather than a premium feature.

The stakes are substantial. Daily US payment flows are projected to range from $5 to $10 trillion, with all payments settling in real time.

For banks, the change will reshape the job. Schmid emphasized that liquidity and duration management will become central to banking operations in the near future.

Schmid also highlighted tokenized deposits as a development that could reshape traditional banking operations. These are essentially ordinary bank deposits represented as digital tokens, keeping money within the regulated banking system while adopting some of the programmability that initially attracted interest in crypto. In Schmid’s view, they help make real-time settlement the norm rather than the exception.

FedNow by the numbers

FedNow launched in July 2023 in response to industry demand for real-time payments. It processes instant credit-push transfers, in which the sender initiates the payment, and settles them in central bank funds.

Participation has grown steadily. As of October 2026, 1,949 financial institutions were using the service. These banks and credit unions represent approximately half of the country’s demand deposit accounts—the everyday checking accounts used by most people.

Transaction volume has grown, too. In Q3 2026, FedNow processed 6.38 million transactions worth $370.9 billion. Record transaction volumes were reported by late 2026.

The stablecoin backdrop

Schmid’s remarks come amid a very different regulatory landscape from the one in place when FedNow launched. The GENIUS Act of 2025 established a regulatory framework for payment stablecoins, giving dollar-pegged tokens a clearer legal basis in the US.

The framework was intended to help stablecoins compete as a payment method. Schmid’s argument indicates that the Fed views its own infrastructure as a more natural fit for everyday money transfers, whether or not stablecoins are regulated.

What this means for crypto and banks

Tokenized deposits are the wildcard. If banks can provide tokenized versions of insured deposits, they could capture some of the programmability valued by crypto users while keeping funds within the banking system. This would intensify competition between bank-issued tokens and private stablecoins, and Schmid’s framing suggests regulators may be comfortable with that result.

For banks, the shift is both operational and competitive. With daily payment flows projected at $5 to $10 trillion settling in real time, treasury teams can’t depend on end-of-day netting to iron out mismatches. Liquidity management becomes an ongoing task.

There are limits to bear in mind. Schmid is one voice at the Federal Reserve, and his remarks point to a possible direction, not a policy decision. FedNow’s coverage of roughly half of demand deposit accounts is significant, but it is not universal, and an institution’s adoption of the service does not automatically translate into heavy use by its customers.

Source: cryptobriefing.com. Adapted by NBTC.