Leading Democrat Maxine Waters voices concern about PayPal stablecoin

Leading House Democrat Maxine Waters says she is “deeply concerned” about PayPal’s move this week to launch its own stablecoin without having a federal framework in place to regulate the asset. 

“PayPal, with 435 million customers globally, exceeds the number of online accounts at all of the megabanks combined,” the California Democrat said on Wednesday in a statement. “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.”

PayPal announced the launch of a U.S. dollar stablecoin in conjunction with Paxos on Monday. The token will be pegged to the dollar and “gradually” made available to PayPal’s customers in the U.S., the company said. 

Waters was the former chair of the House Financial Services Committee, which is now being led by Rep. Patrick T. McHenry, R-N.C. That committee advanced a regulatory framework for payment stablecoins late last month, called the Clarity for Payment Stablecoins Act, which McHenry says would protect consumers via federal guardrails while fostering innovation in the U.S. 

Push and pull

Democrats on the House Financial Services Committee have worked for the past 15 months to regulate stablecoins 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,” Waters said on Wednesday. 

Waters called the bill “toxic and problematic,” adding that it would harm consumers. 

“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,” Waters said.