On August 7, 2023, PayPal introduced the PYUSD stablecoin, merging fiat and crypto for secure and seamless digital transactions. Backed by US dollar deposits and treasuries, it offers stability and adaptability in web3, according to CEO Dan Schulman. Schulman considers PYUSD vital for digital currency growth.
However, Democratic Congresswoman Maxine Waters, a key member of the House Financial Services Committee, raised significant concerns on August 9 regarding PayPal’s stablecoin. Waters expressed her worries about the absence of a comprehensive federal regulatory framework for overseeing and enforcing these new digital assets. She stated:
“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.”
Waters emphasized the crucial necessity of establishing proper federal oversight and enforcement mechanisms to safeguard users and maintain financial stability. She drew attention to the fact that PayPal boasts a vast global user base of 435 million individuals, surpassing the customer accounts held by even the largest traditional banks. According to Waters, this reach amplifies the potential risks associated with stablecoins and underscores the urgency of regulatory action.
While PayPal’s stablecoin is initially intended for U.S. users, Waters criticized a Republican-sponsored bill that lends support to stablecoins, including PayPal’s. She contended that this legislation could curtail the Federal Reserve’s authority to exercise effective oversight, thereby weakening its role as the nation’s central bank. Additionally, she cautioned that broader stablecoin adoption under the Republican bill could adversely impact both inflation and employment.
Waters acknowledged a separate bill promoted by Republican committee members, including House Financial Services Committee Chair Patrick McHenry. However, she expressed skepticism about its chances of becoming law. She called for bipartisan negotiations to address her concerns and ensure appropriate stablecoin regulation.
On August 7, 2023, Representative Patrick McHenry (R-NC), endorsed PayPal’s stablecoin, highlighting its potential within a clear regulatory framework. He promoted the Clarity for Payment Stablecoins Act, emphasizing state-level regulation and consumer protections. McHenry urged Congress to enact comprehensive legislation for digital asset leadership.