- Maxine Waters said that the lack of federal oversight over PayPal’s PYUSD stablecoin is concerning.
- PayPal claims that they have conducted extensive discussions with stablecoin issuers for launching the PYUSD stablecoin.
PayPal’s launch of PYUSD stablecoin earlier this week create much uproar in the crypto community. The American multinational giant has shown its intentions to expand its footprint and services in the crypto space.
However, Congresswoman Maxine Waters expressed major concern with PayPal’s move of launching its PYUSD stablecoin. She added that “there is still no Federal framework for regulation, oversight, and enforcement of these assets,” and thus, the development deeply concerns her.
Additionally, Rep. Maxine Waters (D-Calif.) added that PayPal has a massive customer base of 435 million users worldwide. This is greater than the number of online accounts cumulatively held by all the largest banks combined. Waters wrote.
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.
The House committee has recently endorsed a bill aimed at establishing regulations for U.S. stablecoins, despite some fellow Democrats aligning with Republicans in support. The bill now awaits a potential vote on the House floor. Waters voiced her objections to the Republican-sponsored bill, which approves state-regulated stablecoins like PYUSD but limits Federal Reserve oversight.
PayPal’s PYUSD Stablecoin Follows Regulatory Norms
As we know, Paxos Trust Co. is the issuer of PayPal’s USD-pegged PYUSD stablecoin. As we know, Paxos is primarily regulated by the New York State Department of Financial Services (NYDFS), which also puts PYUSD under the regulatory realm. Besides, the NYDFS also granted PayPal a local crypto license last year in June.
Chief Executive Officer Dan Schulman mentioned that PayPal engaged in thorough talks with US regulators and policymakers before introducing PYUSD. He said.
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We are in a place right now in these conversations where people feel comfortable with a respected, well-regulated US financial entity moving into the stablecoin space and think that it’s an important initial move.
In an interview, Jose Fernandez da Ponte, head of PayPal’s blockchain and digital currencies team, stated that the company perceives the regulatory landscape as moving towards greater clarity and recognizes an increasing demand for an alternative stablecoin due to the market’s concentrated nature.
In contrast to the views expressed by Maxine Waters, Representative Patrick McHenry (R-North Carolina), who chairs the House Financial Services Committee, conveyed his endorsement of PayPal’s newly introduced stablecoin in a statement. He said:
PYUSD shows that “stablecoins — if issued under a clear regulatory framework — hold promise” for payments systems. “Clear regulations and robust consumer protections are essential to enabling stablecoins to achieve their full potential”.
PayPal’s entry into the stablecoin market seems to be well-timed. A Bernstein research report notes that the stablecoin market could grow by 22x in the next five years. Thus, PayPal could have a greater share of the market.
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