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Democratic U.S. Congresswoman and House Financial Services Committee Ranking Member Maxine Waters criticized PayPal’s stablecoin on Aug. 9.
Waters said in a statement:
“I am 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.”
She added that Federal oversight and enforcement against PayPal’s stablecoin is necessary to protect users and guard against financial stability concerns. Waters added that consumers are at risk if there is no legislation to protect them, emphasizing that stablecoins “represent the issuance of a new form of money.”
Waters’ demand for regulation was in part based on PayPal’s massive reach. She noted that PayPal has 435 million customers globally and that its customer base outnumbers all online accounts held by customers of “megabanks.”
However, PayPal has stated that its stablecoin will only be available to users in the U.S., which means the stablecoin may be used by a smaller group in practice.
Waters criticizes Republican bill
Waters noted that, for 15 months, she and other Democrats on the House Financial Services Committee have been preparing legislation to protect users.
She criticized Republican committee members for advancing a separate bill that essentially endorses stablecoins, including PayPal’s. In Waters’ view, this bill restricts the Federal Reserve from exercising its enforcement and oversight duties, thereby “undermining its role” as the central bank. Waters also warned that the broader adoption of stablecoins under the Republican bill could impact inflation and employment.
Waters’ statements concern a bill House Financial Services Committee Chair Patrick McHenry promoted on Aug. 7, shortly after PayPal’s own announcement.
Despite her concerns about the Republican bill, Waters said asserted that the bill has “no chance” of entering law and requested further bipartisan negotiations.