Nevada Assembly Bill 500 (AB500), introduced in the 83rd Legislative Session (2025) by Assembly Speaker Steve Yeager, proposed a novel approach to financial infrastructure by creating a new class of regulated institutions known as payments banks. This legislation aimed to modernize access to financial services by offering a narrow-purpose bank charter focused solely on payments-related activities, without the risks associated with lending or credit intermediation.
A Specialized Charter for Payment Services
AB500 sought to authorize the licensing of payments banks under the supervision of the Nevada Financial Institutions Division (FID). These institutions would be permitted to:
- Maintain deposit accounts,
- Transmit money domestically and internationally,
- Provide merchant acquiring and payment processing services.
Crucially, payments banks would be barred from lending, investing, or other traditional banking functions, establishing them as narrowly tailored entities designed to participate in the U.S. payments system without engaging in credit risk.
This approach was aimed at expanding access to regulated financial infrastructure, particularly for nonbank financial service providers such as fintech companies, payment processors, and stablecoin issuers. By offering a clear, functionally limited charter, Nevada positioned itself as a potential leader in modernizing state-chartered financial services.
Regulatory Structure and Consumer Safeguards
AB500 laid out detailed procedures for chartering, oversight, and compliance. The Commissioner of Financial Institutions would have broad authority to:
- Approve or deny applications,
- Conduct regular examinations,
- Enforce capital, bonding, and governance standards,
- Impose corrective actions or revoke licenses for noncompliance.
The bill also included strong consumer protection mandates, such as limits on misleading business names, mandatory staff training on financial exploitation, and transparency requirements for operational practices.
Fee Mechanism for Regulatory Funding
To fund the supervision of these new institutions, AB500 introduced a public-purpose transaction fee of 0.0025% on each merchant acquiring transaction processed by a payments bank. This model aligned regulatory costs with business volume and avoided reliance on state general funds. It was designed to ensure that regulatory oversight would scale appropriately with market activity, promoting both sustainability and accountability.
Political Reception and Notable Opposition
Though AB500 faced little public or legislative opposition, Nevada’s Commissioner of Financial Institutions submitted formal written opposition to the bill. The letter expressed concerns over:
- The division’s capacity to oversee a new class of financial institutions,
- Uncertainties about the impact on existing regulatory frameworks,
- The adequacy of statutory authority to manage potential systemic risks.
This written opposition stood out as the most significant formal resistance to the legislation. Despite support from industry stakeholders and innovation advocates, the Commissioner’s objections added weight to procedural and oversight concerns and contributed to a more cautious legislative reception.
Legislative Outcome and Broader Significance
AB500 ultimately failed to pass the Assembly, falling short by just two votes (20–22). While the bill’s defeat closed the door for immediate implementation, it sparked serious policy dialogue on the future of financial access, especially for institutions operating at the intersection of technology and payments.
The payments bank concept introduced in AB500 reflects a growing recognition that traditional banking charters may not adequately serve the needs of modern financial service providers. By proposing a supervised, limited-purpose entity with a transparent business model, the bill offered a blueprint for safe innovation in financial access.
Despite its short-term setback, AB500 may serve as a foundational model for future state-led efforts to enable lawful, regulated participation in the U.S. payments infrastructure. With refinements and further engagement from regulatory stakeholders, a future version of this bill could position Nevada as a leader in charter innovation, balancing oversight with open access to critical financial systems.