Axios Event: Real-time payments, blockchain could modernize federal government fund allocation, lawmakers say

Digital payment technologies have streamlined transactions for consumers and businesses alike but governments are lagging behind, using systems for fund allocation and public benefits that are often outdated and difficult to navigate.

Background: Axios senior technology and business senior reporter Kia Kokalitcheva and Axios Pro fintech reporter Lucinda Shen and moderated conversations with Rep. French Hill (R-Ark.) and Rep. Wiley Nickel (D-N.C.) for this virtual event.

• This event was sponsored by ClassWallet.

What they're saying: "The Federal Reserve and the private sector have been working in a competitive way to bring faster payments to the American consumer," Rep. Hill said.

Hill cited the growth of real-time payments as a way to send funds from one person to another quickly and conveniently, a space the federal government just entered last year with the launch of the FedNow system.

• "That technology is now available, and it's rolling out to banks all over the country. There's both a private sector alternative and a fed product called FedNow, and all banks are eligible to sign up for those products."
• Yes, but: Uptake of the federal government's FedNow real-time payment system has lagged in comparison to other countries.

State of play: The House passed the first major legislation regulating crypto Wednesday, a consequential move after years of calls from the industry for regulatory guidance from lawmakers.

As lawmakers continue to weigh how to regulate a new wave of digital assets and financial technologies, Rep. Nickel noted blockchain technology as a potential area of interest for the federal government to modernize payments.

• "We've got to get up to speed with the 21st century on the federal government level, and the blockchain provides the opportunity for us to do that by allowing us to send money to grant recipients and others more efficiently, more transparently, in a more secure way," Rep. Nickel said.

Content from sponsored segment below:

In a View From the Top conversation, ClassWallet CEO Jamie Rosenberg said bureaucratic agencies often don't have the technological capabilities to manage compliance around public fund spending and make sure the money goes where it's intended to go.

• "What's happening is those agencies don't have adequate financial technology to do that, so they're relying on processes like reimbursement or modules in their accounting software that might not be designed for this complex problem," Rosenberg said.