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HR8395119th CongressWALLET

PACE Act of 2026

Sponsored By: Representative Kim, Young [R-CA-40]

Introduced

Summary

This bill would create a federal registration and supervisory regime for payment-service providers. It would set eligibility tests, minimum reserve and liquidity standards, customer-protection rules, and a tailored insolvency framework while clarifying that customer balances are not securities under key federal securities laws.

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  • Consumers and households: Would get stronger protections and clearer treatment of their balances. Providers must segregate custody assets, ban rehypothecation of reserves, and give customers priority claims in insolvency.
  • Payment-service providers: Would need to register with the Comptroller to operate under the regime. Qualifying paths include holding at least 40 state money transmitter licenses, a state depository institution charter, or a state credit union charter, and providers would face new risk-management, recordkeeping, and reporting requirements.
  • Regulators and system stability: Would gain examination, enforcement, and special conservatorship or receivership powers modeled on bank supervision. The bill would also provide access to Federal Reserve payments-reserve accounts with approval timelines and procedures for unusual or exigent circumstances.

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Bill Overview

Analyzed Economic Effects

6 provisions identified: 2 benefits, 0 costs, 4 mixed.

One-to-one reserves and custody rules

If enacted, registered covered providers would have to keep identifiable reserves equal to outstanding payment obligations on a one-to-one basis. Permitted reserve assets would include U.S. coins and currency, Federal Reserve balances, certain deposits, short-term Treasury securities (93 days or less), specified overnight repo/reverse repo and government money market assets, and tokenized forms that comply with law. Providers offering custody or access services would have to segregate customer monetary value, keep separate accounting, and maintain beneficial ownership records. Reserves could not be pledged, rehypothecated, or reused except where a cited GENIUS Act provision allows.

Balances not treated as securities

If enacted, the bill would amend several federal securities laws to say that a balance with a registered covered provider is not a "security." The change would apply to the Securities Act of 1933, the Exchange Act of 1934, the Investment Company Act, the Investment Advisers Act, and the Securities Investor Protection Act. That would change which securities rules and investor protections apply to customer balances held by registered covered providers.

Comptroller oversight and fair access

If enacted, the Comptroller would be able to examine and supervise registered covered providers. Examinations could cover operations, finances, safety and soundness risks, risk systems, and compliance with Federal consumer financial law. Providers would have to notify the Comptroller within 30 days after a critical third-party service contract begins. The Comptroller could require periodic reports, use existing supervisory information to avoid duplication, and enforce violations using remedies like those under the Federal Deposit Insurance Act. The bill would also apply Equal Credit Opportunity Act rules and bar denying or cancelling access based on protected beliefs, with business decisions required to be individualized and risk-based.

Federal registration for payment firms

If enacted, the bill would create a federal registration for "registered covered providers." To qualify, a provider would need at least one of: 40 active state money-transmitter licenses, a state depository charter, or a state credit union charter. For applications filed in the first 180 days after enactment, the Comptroller would have 180 days to say if an application is complete (one 60-day extension allowed); after that, completeness notices would be due within 30 days. After a completeness notice, the Comptroller would have 180 days to approve or deny an application, and failure to act would be deemed approval. The Comptroller would have a rule-based revocation and review process. A provider that meets the 40-license test and registers would be able to offer services in any State.

Federal Reserve account access

If enacted, a registered covered provider could request a payments reserve account at a Federal Reserve Bank in the same way an insured bank can. The Board would have 120 days to approve or deny a request, with one 60-day extension; failure to act would be deemed approval. The Board would be able to issue a directive in defined "unusual and exigent circumstances" to stop a provider from using a payments reserve account to evade reserve or fair-access rules. The Board must define "unusual and exigent circumstances" within 180 days after enactment. The directive process would include prior notice, a 10-day lapse rule if not affirmed, and immediate judicial review options.

Customer priority in nonbank insolvency

If enacted, a nonbank registered covered provider would not be treated as a debtor in Chapters 7 or 11 and could be placed into a State insolvency proceeding run by a covered State regulator. The Comptroller could act as conservator or receiver and must start a proceeding if a State does not act promptly (the Comptroller would define "promptly" by rule). Liquidation priority would pay administrative expenses first, then outstanding payment obligations to customers, then other general liabilities, then subordinated obligations, and shareholders last. Properly segregated custodial assets would not be general assets, and any shortfall in custodial assets would get the same priority as customer payment claims.

Sponsors & CoSponsors

Sponsor

Kim, Young [R-CA-40]

CA • R

Cosponsors

  • Rep. Liccardo, Sam T. [D-CA-16]

    CA • D

    Sponsored 4/21/2026

  • Rep. Sessions, Pete [R-TX-17]

    TX • R

    Sponsored 6/24/2026

Roll Call Votes

No roll call votes available for this bill.

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