PACE Act Creates Federal Framework for Nonbank Payments
Summary
U.S. Representatives Young Kim (R-CA) and Sam Liccardo (D-CA) introduced the Payments Access and Consumer Efficiency Act of 2026 (PACE Act) on April 21, 2026, creating an optional federal registration pathway for large nonbank payment firms. Qualifying covered providers—those with at least 40 state money transmitter licenses or operating under a state bank/credit union charter—could obtain OCC-registered status, gaining access to Federal Reserve payment rails (Fedwire, FedNow, FedACH) in exchange for bank-like prudential standards including 1:1 liquid asset reserves, customer fund segregation, and capital requirements modeled on the GENIUS Act stablecoin regime. The bill also clarifies that registered provider balances are not securities under federal law, potentially shifting relationships from SEC/SIPC oversight to the PACE/OCC framework.
About this source
JD Supra is the legal industry's open library where US and UK law firms publish client alerts, regulatory analysis, and case commentaries. The Finance & Banking section aggregates everything published by partners at firms covering bank supervision, payments, capital markets, fintech, securitization, AML, and consumer finance. Around 400 alerts a month from across the bar. Watch this if you want primary-source law-firm thinking on the latest CFPB rule, OCC bulletin, FCA consultation, or Basel update, before it shows up in trade press. The signal-to-noise ratio is genuinely good because firms only publish when they have something to say to their own clients. GovPing pulls each alert with the firm name, author, and topic.
What changed
The PACE Act would establish a new federal registration framework administered by the OCC for large nonbank payment providers meeting eligibility thresholds. Registered covered providers would face mandatory 1:1 reserves in highly liquid assets, customer fund segregation requirements, risk management standards aligned with the GENIUS Act stablecoin regime, ECOA creditor obligations, and prohibition on denying services based on protected beliefs. The bill also places registered providers under a special resolution framework outside the Bankruptcy Code, prioritising customer payment obligations above general unsecured creditors. Additionally, balances with registered providers would be explicitly excluded from securities classification under federal securities statutes.
Payment firms currently operating under 40 or more state money transmitter licenses should evaluate whether voluntary federal registration under the PACE Act would provide operational advantages, including direct access to Fed payment rails and national operating authority, weighed against compliance costs and OCC examination. Firms offering custody or access services must prepare for segregation and recordkeeping obligations. The bill's "fair access" provisions—prohibiting service denial based on constitutionally or statutorily protected beliefs—represent a new compliance consideration. Given the uncertain legislative prospects, firms should monitor development through hearings and markups.
Archived snapshot
Apr 24, 2026GovPing captured this document from the original source. If the source has since changed or been removed, this is the text as it existed at that time.
April 23, 2026
House Bill Would Create New Federal Regime for Nonbank Payment Firms
Keith Barnett, Taylor Gess, Carlin McCrory, Ethan Ostroff, James Stevens Troutman Pepper Locke + Follow Contact LinkedIn Facebook X ;) Embed
U.S. Representatives Young Kim (R-CA) and Sam Liccardo (D-CA) introduced the Payments Access and Consumer Efficiency Act of 2026 (PACE Act). The bill would create an optional federal framework for large state‑regulated payment companies, giving qualifying firms Office of the Comptroller of the Currency (OCC) supervision and potential direct access to Federal Reserve payment rails, in exchange for bank‑like prudential and customer‑protection standards. It is an early‑stage proposal with uncertain prospects but significant implications for nonbank payments and bank–fintech partnerships.
Who Qualifies and What Registration Does
The Act would allow certain “covered providers” to become “registered covered providers” by applying to the OCC. Covered providers include firms that provide payment services and either hold at least 40 active state money transmitter licenses or operate under a state bank or credit union charter. The OCC must decide applications based on specified factors (including financial resources, Bank Secrecy Act (BSA)/anti-money laundering (AML) readiness, and public benefit) within fixed timelines, with “deemed approval” if it does not act in time. A registered provider that qualified via money transmitter licenses could operate its payment services nationwide.
Reserves, Segregation, and Customer Protection
Registered covered providers would be required to maintain 1:1 reserves backing outstanding payment obligations in highly liquid, low‑risk assets such as cash, Fed balances, insured deposits, short‑term Treasuries, and qualifying government money market funds, with limited rehypothecation. Providers offering custody or access services would have to segregate customer monetary value from their own assets and maintain detailed records of customer obligations and beneficial ownership. These standards are designed to reduce run risk and better protect customers in stress or failure scenarios.
Risk Management and “Fair Access”
The OCC would apply capital, liquidity, and risk‑management standards modeled on the federal stablecoin (GENIUS Act) regime, tailored to the provider’s business model. Registered providers would be subject to Equal Credit Opportunity Act (ECOA) as creditors and would also be prohibited from denying or canceling payment services based on customers’ constitutionally or statutorily protected beliefs, affiliations, or political views. Business decisions must be grounded in individualized, objective, risk‑based analysis rather than ideological considerations.
Supervision, Insolvency, and Fed Access
Registered covered providers would be examined by the OCC for safety and soundness, risk management, and compliance with federal consumer financial law, and critical third‑party service providers could themselves be supervised. Nonbank registered providers would be removed from the Bankruptcy Code and placed into a special resolution framework run by state regulators or the OCC, with customer payment obligations prioritized above general unsecured creditors and equity. Segregated custodial assets would sit outside the estate to the extent properly maintained. Separately, registered providers could request “payments reserve accounts” at the Federal Reserve, with access to Fedwire, FedNow, and FedACH, subject to statutory decision deadlines and emergency directive authority for the Fed.
Clarification Under Securities Laws and Next Steps
The bill would amend major federal securities statutes to specify that balances with registered covered providers are not “securities,” pushing those relationships firmly into the PACE/OCC framework rather than Securities and Exchange Commission and Securities Investor Protection Act regimes. As a proposed bill, the PACE Act will likely be revised through hearings and markups, and its ultimate passage is uncertain. Nevertheless, it signals congressional interest in a national, bank‑like framework for large nonbank payment firms and in clearer rules for their access to payment rails and customer funds.
;) ;) Report
Latest Posts
- Nebraska Amends Age-Appropriate Online Design Code Act
- CCPA Cybersecurity Audit: Part 4 – Whose Name Is on the Line: Risks, Enforcement, and Responsibility
- House Bill Would Create New Federal Regime for Nonbank Payment Firms
- California Intervenor Reforms Move to Final Review as CDI Submits Proposition 103 Rulemaking
- Federal Banking Agencies Propose Overhaul of AML/CFT Program Rules to Reflect Recent FinCEN Reforms See more »
DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
Attorney Advertising.
©
Troutman Pepper Locke
Written by:
Troutman Pepper Locke Contact + Follow Keith Barnett + Follow Taylor Gess + Follow Carlin McCrory + Follow Ethan Ostroff + Follow James Stevens + Follow more less
PUBLISH YOUR CONTENT ON JD SUPRA
- ✔ Increased readership
- ✔ Actionable analytics
- ✔ Ongoing writing guidance Join more than 70,000 authors publishing their insights on JD Supra
Published In:
Bankruptcy Code + Follow Federal Reserve + Follow Financial Institutions + Follow Financial Regulatory Reform + Follow FinTech + Follow OCC + Follow Payment Systems + Follow Proposed Legislation + Follow Regulatory Agenda + Follow Risk Management + Follow Administrative Agency + Follow General Business + Follow Consumer Protection + Follow Finance & Banking + Follow Securities + Follow more less
Troutman Pepper Locke on:
"My best business intelligence, in one easy email…"
Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra: Sign Up Log in ** By using the service, you signify your acceptance of JD Supra's Privacy Policy.* - hide - hide
Related changes
Get daily alerts for JD Supra Finance & Banking
Daily digest delivered to your inbox.
Free. Unsubscribe anytime.
Source
About this page
Every important government, regulator, and court update from around the world. One place. Real-time. Free. Our mission
Source document text, dates, docket IDs, and authority are extracted directly from JD Supra.
The summary, classification, recommended actions, deadlines, and penalty information are AI-generated from the original text and may contain errors. Always verify against the source document.
Classification
Who this affects
Taxonomy
Browse Categories
Get alerts for this source
We'll email you when JD Supra Finance & Banking publishes new changes.
Subscribed!
Optional. Filters your digest to exactly the updates that matter to you.