PACE Act Would Let Nonbanks, Crypto Tap Fed Payment Rails

Representatives Young Kim, a Republican, and Sam Liccardo, a Democrat, introduced the Payments Access and Consumer Efficiency (PACE) Act this month. The bill would allow eligible nonbank payment providers, including regulated crypto firms, to connect directly to Federal Reserve payment systems such as FedNow, Fedwire and FedACH instead of routing transactions through partner banks.

Under current rules, many digital payment companies rely on correspondent banks to reach Fed clearing and settlement systems. Supporters of the PACE Act say that indirect access can add time and fees and that direct access could speed transfers and reduce transaction costs by removing intermediary steps.

The bill would create a federal registration framework for nonbank firms, administered by the Office of the Comptroller of the Currency. To qualify, firms would need to meet defined financial, operational and licensing standards, such as holding multiple state money-transmitter licenses and demonstrating capital and risk-management capabilities.

Consumer protection provisions are included in the proposal. Registered firms would be required to fully back customer funds with liquid assets, keep customer balances segregated from corporate accounts, and maintain specified risk-management controls. The bill also would give customers priority to recover funds if a registered provider becomes insolvent.

Representative Kim described the legislation as a way to shorten delays in accessing funds and lower costs for consumers. Liccardo said expanded access could increase competition among payment providers and ease fee pressure on families and small businesses.

Fintech and digital-asset trade groups expressed support. Summer Mersinger, chief executive of the Blockchain Association, welcomed access for digital-asset payment companies to the same financial infrastructure as other providers and said it would enable faster and cheaper payment services. Penny Lee, chief executive of the Financial Technology Association, said broader access could reduce wait times for direct deposits and bring U.S. payment speeds closer to those in other major economies.

The PACE Act would add federal oversight while setting capital and operational requirements intended to protect the financial system. Lawmakers and industry groups will need to resolve technical and regulatory details as the bill moves through Congress.