HFSC Ranking Member Maxine Waters ‘Deeply Concerned’ About PayPal Stablecoin
BY PYMNTS | AUGUST 9, 2023
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Maxine Waters ‘Deeply Concerned’ About PayPal Stablecoin
The top Democrat on the House Financial Services Committee (HFSC), Rep. Maxine Waters, said she is “deeply concerned” about PayPal’s decision to launch a stablecoin.
The launch comes at a time when there is no federal framework for regulating these assets, Waters said in a Wednesday (Aug. 9) press release.
“PayPal, with 435 million customers globally, exceeds the number of online accounts at all of the megabanks combined,” Waters said in the release. “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’ comments contrast with those of the chairman of the HFSC, Rep. Patrick McHenry, who praised PayPal’s launch of a stablecoin.
“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 said in a Monday (Aug. 7) press release. “Clear regulations and robust consumer protections are essential to enabling stablecoins to achieve their full potential. That’s why it’s more important than ever that Congress enact legislation to provide comprehensive digital asset regulation, especially for stablecoins.”
PayPal announced Monday that it is introducing a U.S. dollar-pegged stablecoin called PayPal USD that is “designed to contribute to the opportunity stablecoins offer for payments and is 100% backed by U.S. dollar deposits, short-term U.S. Treasuries and similar cash equivalents.”
The coin, redeemable 1:1 for U.S. dollars and issued by Paxos Trust Co., lets consumers fund purchases with PayPal USD by choosing it at checkout. It also lets consumers convert any of the cryptocurrencies supported by PayPal to and from PayPal USD.
Waters said in her Wednesday press release that consumers are at greater risk of harm while there are no “clear and strong” consumer protections at the federal level. She added that federal, not state, regulators should have authority over stablecoins.
“Stablecoins represent the issuance of a new form of money, making it integral that there are federal guardrails,” Waters said in the release. “[Our] central bank, the Federal Reserve, handles monetary policy and our money supply, and they must be able to do their job.”
