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Rep. Maxine Waters (D-California) 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.”
On Monday, PayPal (PYPL) made history by launching its own dollar-backed stablecoin, PYUSD, marking the inaugural instance of a worldwide payment company issuing its proprietary stablecoin.
Waters, the leading Democratic member of the House Financial Services Committee, pointed out that PayPal boasts a customer base of 435 million worldwide, surpassing the cumulative count of online accounts held by all major 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 has recently given its approval to a bill aimed at establishing regulations for stablecoins in the United States. Despite Representative Waters' dissent, a number of her Democratic colleagues joined hands with Republicans in support of the legislation. The bill has now advanced for potential consideration and voting on the House floor. However, if it successfully passes the House, it might face resistance from Senate Democrats.
Waters raised concerns about the Republican-backed legislation, which greenlights state-regulated stablecoins like PYUSD but bars the Federal Reserve from exercising oversight over 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.
In contrast, Representative Patrick McHenry (R-North Carolina), who chairs the House Financial Services Committee, voiced his endorsement for PayPal's new stablecoin in a statement released 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.
