Today, Congresswoman Maxine Waters (D-CA), the top Democrat on the House Financial Services Committee, released this statement following PayPal’s launch of its U.S. dollar-denominated stablecoin.
“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. PayPal, with 435 million customers globally, exceeds the number of online accounts at all of the megabanks combined. 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.
“As I’ve said for more than a year, without legislation on the books that establishes clear and strong consumer protections at the Federal level, consumers are at greater risk of harm at the hands of bad actors. Stablecoins represent the issuance of a new form of money, making it integral that there are Federal guardrails. As our central bank, the Federal Reserve handles monetary policy and our money supply, and they must be able to do their job. Additionally, when the President’s Working Group on Financial Markets called on Congress to pass legislation to improve the oversight and regulation of stablecoins, they emphasized the need for Federal, not state, prudential authority over stablecoins to address risks like stablecoin runs, systemic risk, and concentration of economic power.
“While I and Democrats on the Committee have been working diligently for 15 months on legislation to help to address this issue, and create an environment where consumers and the economy would be protected in the event a corporation like PayPal decided to launch its own stablecoin, last month, Committee Republicans abruptly decided to move forward with a toxic and problematic bill that will pose even greater harm to consumers and risk to our financial system. Specifically, the Republican bill gives stablecoins like PayPal USD that are issued under state regimes a seal of approval, but blocks the Federal Reserve from overseeing or enforcing any Federal standards. Moreover, the Republican bill undermines the Fed's role as our central bank, making it harder to protect the economy against inflation or support maximum employment if stablecoins are broadly adopted.
“As I said during last month’s markup, the Republican bill has no chance of actually being signed into law, and I urge Chair McHenry and Committee Republicans to come back to the negotiation table to craft a bill that actually works. The quicker we can get together, the quicker we can ensure that consumers and our financial system are protected.”