Rep. Maxine Waters (D-Calif.) released a statement Wednesday saying she’s “deeply concerned that PayPal has chosen to launch its own stablecoin while there is still no Federal framework for regulation, oversight, and enforcement of these assets.”
Waters, the top Democrat on the House Financial Service Committee, noted that PayPal has 435 million customers around the world, more than the number of online accounts of all the largest banks combined.
“Given PayPal’s size and reach, Federal oversight and enforcement of its stablecoin operations is essential in order to guarantee consumer protections and alleviate financial stability concerns,” Waters wrote.
The House committee recently approved legislation seeking to set up guardrails for U.S. stablecoins, with several of Waters’ fellow Democrats bucking her opposition to vote with Republicans. That bill is now eligible for a floor vote in the House, though it would be unlikely to get a warm welcome from Senate Democrats if approved there.
Waters criticized the Republican-sponsored bill for approving stablecoins like PYUSD that are issued under state regimes but preventing the Federal Reserve from overseeing them.
“Moreover, the Republican bill undermines the Fed’s role as our central bank, making it harder to protect the economy against inflation or support maximum employment if stablecoins are broadly adopted,” she added.
By contrast, Rep. Patrick McHenry (R-North Carolina), chair of the House Financial Services Committee, expressed support for PayPal’s new stablecoin in a statement issued on Monday.
“This announcement is a clear signal that stablecoins — if issued under a clear regulatory framework — hold promise as a pillar of our 21st century payments system,” McHenry wrote.
UPDATE (August 9, 2023, 17:12 UTC): Adds information on status of the U.S. stablecoin bill.