Bipartisan PACE Act Seeks to Open Federal Reserve Payment Rails to Nonbank Crypto Firms

California Representatives Sam Liccardo and Young Kim introduced the bipartisan Payments Access and Consumer Efficiency (PACE) Act to grant regulated nonbank crypto firms direct access to Federal Reserve payment rails. The legislation would establish streamlined federal registration with clear standards, require firms to fully back consumer funds separately from company assets, and give the Federal Reserve Board final authority over skinny master account applications. Currently, only Kraken holds a Fed master account among crypto firms, while Ripple and Circle await approval. The bill has garnered support from major crypto and fintech trade groups but faces opposition from the banking industry, which warns of fraud risks and deposit outflows from stablecoin competition.

Bipartisan PACE Act Introduction and Objectives

• ▪The Payments Access and Consumer Efficiency (PACE) Act requires payment firms to fully back consumer funds and keep them separate from company assets.
• ▪The Payments Access and Consumer Efficiency (PACE) Act recognizes skinny master accounts and gives the Federal Reserve Board final decision-making over skinny master account applications.
• ▪The Payments Access and Consumer Efficiency (PACE) Act is a bipartisan crypto bill.
• ▪U.S. Representatives Young Kim and Sam Liccardo introduced the Payments Access and Consumer Efficiency (PACE) Act.
• ▪The Payments Access and Consumer Efficiency (PACE) Act would enable regulated U.S. crypto firms to access the Federal Reserve's payment rails.
• ▪The Payments Access and Consumer Efficiency (PACE) Act enables qualified providers to access federal payment systems directly to reduce delays and lower costs for consumers and small businesses.
• ▪The Payments Access and Consumer Efficiency (PACE) Act aims to help Americans send and receive money faster and more cheaply by modernizing how payment companies access payment rails.
• ▪Under the Payments Access and Consumer Efficiency (PACE) Act, consumers will have priority when recovering funds if a payment company fails.
• ▪The Payments Access and Consumer Efficiency (PACE) Act provides streamlined federal registration with clear standards and review deadlines for qualified payment companies.

Access to Federal Reserve Payment Rails and Master Accounts

• ▪The Payments Access and Consumer Efficiency (PACE) Act allows qualified nonbank providers to obtain direct access to Federal Reserve payment rails.
• ▪Crypto exchange Kraken has secured a Federal Reserve master account.
• ▪Kraken is the only crypto firm that has access to the Federal Reserve's payment rails.
• ▪Skinny master accounts would grant crypto firms access to the U.S. central bank's payment rails.
• ▪Ripple and Circle are currently awaiting the Federal Reserve's proposed skinny master accounts.

Industry Support and Opposition from Banking Sector

• ▪Summer Mersinger is CEO of the Blockchain Association.
• ▪The Financial Technology Association endorsed the Payments Access and Consumer Efficiency (PACE) Act.
• ▪The Colorado Bankers Association warned that skinny master accounts could open up a window for expedited fraud.
• ▪The banking industry has opposed granting crypto firms access to the Federal Reserve's payment rails.

Perspective of Banking industry

• ▪The Colorado Bankers Association warned that skinny master accounts could open up a window for expedited fraud.

Perspective of Bill sponsors Sam Liccardo and Young Kim

• ▪Representatives Sam Liccardo and Young Kim position the Payments Access and Consumer Efficiency (PACE) Act as helping Americans send and receive money faster and more cheaply.
• ▪Sam Liccardo and Young Kim frame Federal Reserve payment rail access for crypto firms as a modernization effort rather than deregulation.

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