PACE Act could bypass traditional bank rails
The proposed bipartisan PACE Act could significantly benefit large non-bank payment processors by granting them direct access to Federal Reserve payment rails, bypassing traditional bank intermediaries.
The argument
The guest argued that the bill would allow major payments providers with at least 40 state licenses to obtain an OCC license, preempting state regulations and gaining direct access to FedNow, ACH, and Fedwire. This regulatory shift would enable these firms to operate payment systems without the heavy compliance costs of a full banking charter, provided they do not engage in lending.
The thesis, stress-tested
✓ What validates it
- ✓Passage of the PACE Act by Congress
- ✓OCC granting the first payment-only licenses under the new framework
▸ Risks discussed
- ▸Legislative gridlock making the passage of the bill difficult
- ▸Pushback from established banking lobbies who oppose new competition
Hear it yourself
"So it's it's the Supreme Court of bust for custodial. Though, you know, they may be able to ask themselves, well, will we be eligible for a master account if Kraken eventually got one under the new Fed regime? Maybe they can apply as a tier three institution like Kraken, which received. They're pretty similar businesses, both crypto facing Wyoming special deposit special purpose depository institutions. And so, you know, custodian may think, let's not spend all that money on a Supreme Court, you know, hail Mary. Let's see if we can go the cracking route and and and get access to a master account under the the new thinking at the Fed."
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