According to a recent report by Bloomberg, Maxine Waters, the top Democrat on the House Financial Services Committee, expressed deep concern over PayPal Holdings Inc.’s stablecoin launch without a comprehensive regulatory framework.
According to Waters, the absence of federal oversight poses risks to consumers and the stability of the cryptocurrency market.
Democrat Criticizes PayPal Stablecoin Launch
Stablecoins, digital tokens pegged to traditional assets like the U.S. dollar, have existed for nearly a decade. Primarily used for trading purposes, they have had limited adoption in consumer payments.
Per the report, Waters highlighted the need for robust regulation, oversight, and enforcement mechanisms to protect consumers from potential harm caused by bad actors in the industry.
Waters also criticized a stablecoin bill recently advanced by the House committee, referring to it as “toxic and problematic.”
The proposed legislation, championed by Republican Patrick McHenry, fails to grant the Federal Reserve authority to oversee these digital assets, according to Waters. McHenry, on the other hand, sees promise in PayPal’s stablecoin as a payments system and supports its potential stating:
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.
PayPal’s stablecoin, known as PayPal USD (PYUSD), is pegged to the U.S. dollar and issued by Paxos Trust Co. The company assured regulators and policymakers that extensive discussions had occurred before the launch, emphasizing its commitment to compliance and collaboration with authorities.
The launch of Paypal PYUSD has invited comparisons to Meta Platforms Inc.’s failed stablecoin, previously known as Libra and now rebranded as Diem.
Waters had been a vocal critic of Meta’s endeavors, citing concerns over the tech giant’s expanding influence and urging them to halt the currency’s development. The controversy surrounding Meta’s stablecoin ambitions eventually led to the project’s abandonment in the past year.
As the discussion around stablecoins intensifies, Waters’s critique underscores the urgent need for a comprehensive regulatory framework that ensures consumer protection and mitigates potential risks associated with these digital assets.
The lack of federal guidelines leaves consumers vulnerable to potential harm, reinforcing the necessity for legislation that establishes clear and robust consumer safeguards.
With the industry rapidly evolving, ongoing dialogue between lawmakers, regulators, and stakeholders is crucial to balance innovation and stability in the ever-expanding cryptocurrency landscape.
As of the latest update, the total market capitalization of the cryptocurrency market remains stagnant within the range of $1.13 trillion to $1.15 trillion.
Meanwhile, Bitcoin (BTC), the leading cryptocurrency in terms of trading volume, has again retreated to its range-bound levels that have persisted since August.
Despite briefly touching the $30,200 mark, Bitcoin’s attempt to surpass the $30,000 resistance line has been unsuccessful. Currently, it is trading at $29,400, reflecting a 1.4% decline over the past 24 hours.
Featured image from iStock, chart from TradingView.com