The PACE Act of 2026 establishes consumer protection standards and regulatory clarity for payment service providers. The legislation requires registered payment service providers to maintain financial reserves equal to at least 100 percent of their outstanding payment obligations using only highly liquid and safe assets like U.S. currency and Treasury bills, with strict prohibitions on pledging or reusing these reserves, and mandates detailed record-keeping of customer obligations and reserve holdings. The bill also exempts customer balances held with registered payment providers from federal securities laws by amending major securities statutes, ensuring that payment service providers are not inadvertently regulated as investment firms or brokers simply because customers maintain funds with them. These provisions aim to protect consumers while clarifying the regulatory status of the payments industry.
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