By Juan Dean
A remarkable shift has occurred as over 900 financial institutions joined the Federal Reserve’s FedNow instant payment service, demonstrating growing appetite for digital payment modernization. This movement comes as cryptocurrency companies like Coinme position themselves as infrastructure providers ready to help traditional financial players bridge the gap to digital assets.
Why Banks Want Faster Payments
Consumer expectations have fundamentally changed. People who stream movies instantly and receive same-day deliveries question why financial transactions take days to process. Traditional ACH transfers typically settle in 1-3 business days—too slow for today’s digital economy.
FedNow addresses this gap by providing “a new instant payment service that enables financial institutions of every size, and in every community across the U.S., to provide safe and efficient instant payment services.”
Meanwhile, cryptocurrency networks typically settle transactions within minutes or seconds. As Neil Bergquist, Coinme CEO, explains: “Crypto is built on blockchains. Blockchains are digitally native. It doesn’t matter which country you’re in, you’re able to process and settle regardless.”
The Cross-Border Opportunity
International transfers remain particularly problematic—expensive, slow, and opaque with multiple intermediaries each taking fees. A simple transfer might pass through several correspondent banks before reaching its destination days later.
Bergquist highlights this opportunity: “There’s $50 billion a year of cash that’s sent from the United States to Latin America, and that’s cash to cash, which is surprising. Well, now you can put that cash into a Coinme location, get crypto and send that anywhere faster and cheaper than a lot of existing solutions.”
Competitive Pressure
Financial institutions face growing competition from fintech startups and payment companies with streamlined, digital-first experiences. Payment apps like Venmo and Cash App have acquired millions of users, while companies like Wise have built substantial businesses focused on efficient international transfers.
Demographic data reveals that 28% of investors aged 21-43 see greater growth potential in crypto and digital assets, compared to just 4% of those 44+. This generational divide suggests banks risk losing younger customers if they fail to adapt.
The Infrastructure Partnership Model
Most financial institutions lack internal expertise to build cryptocurrency capabilities themselves. This knowledge gap creates partnership opportunities with companies that have built the necessary infrastructure.
“We’re a platform that provides crypto infrastructure,” explains Bergquist. “That infrastructure is the ability to create an account and conduct know-your-customer compliance, to enable customers to use a debit card or cash to buy or sell digital currencies, and to custody digital currencies.”
MoneyGram exemplifies this approach. The company first partnered with Coinme to enable cash-to-crypto services at physical locations, then took a 4% ownership stake and expanded cryptocurrency services to its mobile app.
Regulatory Progress
Recent regulatory developments have provided more clarity for financial institutions. The SEC’s approval of Bitcoin ETFs in January 2024 marked a significant shift.
“The bitcoin ETF received some of the largest capital inflows out of any ETF ever created,” notes Bergquist. “That was a big turning point where everyone talked about institutional adoption coming. Well, here it is.”
The Convergence Path
Rather than cryptocurrency replacing traditional finance, we’re seeing traditional finance absorbing cryptocurrency functionality into existing systems. Bergquist articulates this when describing a future where “people who maybe don’t care about crypto will be using crypto and blockchain technology, and it might not be terribly obvious.”
For the 900+ financial institutions exploring digital payment innovation through platforms like FedNow, cryptocurrency infrastructure providers offer potential pathways to further modernization—blending the regulatory structure and consumer trust of traditional banking with the efficiency and flexibility of digital assets.
