Ripple and Circle Finally 'Directly Connected to the Fed'...How Will the US Payment System Change?

▲ Ripple, Circle / AI-generated image

A bipartisan bill allowing major cryptocurrency companies such as Ripple and Circle to access the federal payment network has been introduced in the US Congress, signaling a rapid blurring of the lines between traditional finance and digital assets.

According to a report by crypto-specialized media outlet CoinGape on April 22, Representatives Young Kim and Sam Liccardo co-sponsored the 'PACE Act (Payments Access and Consumer Efficiency Act).'

The core of the bill is to allow regulated cryptocurrency companies to directly access the US Federal Reserve (Fed)'s payment infrastructure. This would enable companies like Ripple and Circle to utilize the payment network in a similar way to traditional banks.

The lawmakers who introduced the bill pointed out that the current US payment system consists of multiple stages, resulting in slow processing speeds and high costs. Therefore, the plan is to accelerate remittance speeds and lower costs by granting qualified non-bank payment providers access to the federal payment network.

In particular, this bill officially recognizes the concept of 'skinny master accounts' and grants final authority over the approval of such accounts to the Fed Board of Governors.

Furthermore, regulatory standards for payment companies will be strengthened. Customer assets must be fully collateralized and managed separately from corporate assets. Safeguards are also included to ensure that consumers have priority in recovering funds if a company goes bankrupt.

The industry believes that if this bill passes, the structure of the entire cryptocurrency payment industry, including stablecoins, is likely to fundamentally change. In fact, major organizations such as the Blockchain Association, the Digital Chamber, and the Crypto Innovation Council have also come out in support of the bill.

However, there is also strong opposition from the existing banking sector. Some banking groups have warned that granting crypto companies access to the Fed's payment network could increase the risk of fraud, expressing their opposition to the implementation of the system.

This bill, coupled with the recently delayed US cryptocurrency market structure bill (CLARITY), is expected to be a significant variable for the overall digital asset regulatory framework. If a path opens for cryptocurrency companies to directly connect to traditional financial infrastructure, the competitive landscape of the payment market itself could be significantly shaken.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*