A significant regulatory step has been taken in the US targeting financial technology and cryptocurrency companies. Two figures from the Republican and Democratic parties, Young Kim and Sam Liccardo, publicly announced a bipartisan bill called the “PACE Act.”
The bill aims to create a new national payment license for fintech and crypto companies. This will provide an optional new regulatory framework for state-regulated deposit institutions and credit unions engaged in money transfer activities. This framework will be overseen by the Office of the Comptroller of the Currency (OCC).
The bill also allows these institutions direct access to the Fed’s payment services. This approach aligns with the “skinny master accounts” concept previously raised by Fed Board member Christopher Waller. Indeed, the cryptocurrency exchange Kraken obtained similar access earlier this year.
Under the new regulations, the final decision-making authority regarding these “skinny master account” applications will also be transferred from regional Fed banks directly to the Fed Board of Governors.
Another important goal of the PACE Act is to reduce transaction costs for consumers. Under the current system, multi-layered fees charged between banks for accessing payment infrastructures like ACH are passed on to the end user. The new model aims to offer faster, cheaper, and more reliable payment services.
In a statement on the matter, Representative Liccardo said, “We can reduce bank fees that burden so many American families. Innovative payment systems that provide wider access can deliver cheaper, faster, and more reliable services. I am proud to work with Young Kim to bring this bipartisan PACE Act to life.”
*This is not investment advice.