PACE Act of 2026
Sponsored By: Representative Kim, Young [R-CA-40]
Introduced
Summary
Creates a federal framework for registered covered providers. This bill would set up a registration and supervision system for state-licensed payment service providers and require strong customer protections, an insolvency priority for customers, and a pathway to access Federal Reserve payments reserve accounts.
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- Consumers and households: Requires reserves that back outstanding payment obligations on at least a 1-to-1 basis and strict segregation and recordkeeping to protect customer funds. Acceptable reserve assets include U.S. coins, funds in Federal Reserve accounts, insured deposits, and Treasury securities with 93 days or less to maturity.
- Providers and markets: Establishes a Comptroller-run registration process with criteria for financial resources, governance, and public benefit. It applies tailored capital, liquidity, and risk rules and clarifies that balances with registered covered providers are not treated as federal "securities."
- Insolvency, Fed access, and regulators: Sets an insolvency regime that gives customer claims priority over other creditors and preserves segregated custodial assets. Registered providers may seek access to payments reserve accounts at Federal Reserve Banks with Board review within 120 days, extendable by 60 days.
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Bill Overview
Analyzed Economic Effects
7 provisions identified: 6 benefits, 0 costs, 1 mixed.
Stronger protections for customer balances
If enacted, the bill would require registered payment providers to back the money they owe customers at least 1-to-1 with allowed liquid assets. Allowed reserves would include U.S. cash, Federal Reserve balances, short-term Treasury securities (93 days or less), certain overnight repurchase agreements, insured deposits within limits, and approved government-only funds or tokenized versions where legal. Providers would have to keep each customer's balance separate, keep records of beneficial ownership, and tell the Comptroller about critical vendor contracts within 30 days. This would lower the chance your stored payment balance is commingled or lost if a provider fails.
Priority for customers in insolvency
If enacted, the bill would create a special insolvency process for nonbank registered providers. In a liquidation or resolution, customer payment claims and properly segregated custodial assets would be paid ahead of most other creditors and shareholders. If segregated custodial assets fall short, that shortfall would share the same priority as other customer payment claims. The Comptroller or a covered State regulator would run the proceeding, and the Comptroller must act if a State does not promptly start one.
Balances not treated as securities
If enacted, the bill would add language to several federal securities laws saying that a customer's balance with a registered covered provider is not a "security." The change would apply in statutes like the Investment Advisers Act, Investment Company Act, Securities Act, Exchange Act, and SIPA definitions. This would alter how securities-law rules apply to those balances and to some provider activities, but it would not create SIPC-style insurance for customers.
Fed account access for payment firms
If enacted, the bill would let registered covered providers request a payments reserve account at a Federal Reserve Bank on the same terms as banks. The Board must approve or deny requests within 120 days, with one 60-day extension allowed, and a failure to act would be treated as approval. This would give qualifying payment firms direct access to Fed payment services like Fedwire, FedNow, and FedACH on bank-like terms.
New federal registration for payment firms
If enacted, the bill would let certain state-licensed payment companies apply to register with the Comptroller as "registered covered providers." To qualify a firm must meet tests like having limited payment activities, adequate financial resources, risk controls, BSA compliance, and a public-benefit showing. Initial filing and decision timing rules would apply (completeness notice and 180-day final decision windows, with deemed approval if the Comptroller does not act). The Comptroller must adopt a revocation process by rule.
Fed emergency orders to stop misuse
If enacted, the bill would let the Federal Reserve, in "unusual and exigent circumstances," issue emergency cease-and-desist directives to registered providers misusing payments reserve accounts or violating core reserve, custody, or fair-access rules. The Fed must give 48 hours' written notice to the State regulator and Comptroller and must define "unusual and exigent circumstances" within 180 days. Providers could object and seek quick court review; an unchanged directive would lapse if not affirmed within 10 days after an objection. This gives the Fed a fast tool to protect payment stability but also creates a quick enforcement power that providers must face.
Fair access to payment services
If enacted, the bill would require registered payment providers to follow a Fair Access Obligation similar to the Equal Credit Opportunity Act. Providers could not deny access or close accounts because of a person's protected beliefs, affiliations, or political views. Providers would need to base decisions on individualized, objective, and risk-based analyses. This would help prevent some arbitrary denials or account closures.
Sponsors & CoSponsors
Sponsor
Kim, Young [R-CA-40]
CA • R
Cosponsors
Liccardo
CA • D
Sponsored 4/21/2026
Roll Call Votes
No roll call votes available for this bill.
View on Congress.gov