In a recent statement, Democratic U.S. Congresswoman, Maxine Waters, criticized PayPal’s decision to launch its own stablecoin without a proper federal framework for regulation, oversight, and enforcement. Waters expressed deep concerns regarding the lack of protections for users and financial stability in the absence of legislation.
Waters emphasized the importance of Federal oversight and enforcement to safeguard users and address potential financial stability concerns. She argued that without proper legislation, consumers are at risk, particularly because stablecoins represent the issuance of a new form of money. Waters’ call for regulation is partly motivated by PayPal’s significant global reach, with 435 million customers worldwide, outnumbering the customer base of even the largest banks.
While Waters raised concerns about PayPal’s stablecoin, it is worth noting that the company has stated its stablecoin will be limited to users within the United States. This means that the potential impact may be narrower than initially perceived, as it will primarily affect a smaller group of users within the country.
Democratic Efforts for User Protection
Waters highlighted the efforts of herself and other Democrats on the House Financial Services Committee over the past 15 months to draft legislation aimed at protecting users. She expressed criticism towards Republican committee members who advanced a separate bill that seemed to endorse stablecoins, including PayPal’s. According to Waters, this bill hampers the Federal Reserve’s ability to exercise its enforcement and oversight duties, undermining its role as the central bank. She also warned about the broader adoption of stablecoins under the Republican bill potentially impacting inflation and employment.
Waters expressed her skepticism regarding the Republican bill proposed by House Financial Services Committee Chair, Patrick McHenry, shortly after PayPal’s announcement. Although she acknowledged her concerns about the bill, Waters believed that it had “no chance” of becoming law. Therefore, she called for further bipartisan negotiations to address the potential risks associated with stablecoins and develop comprehensive legislation that prioritizes user protection and financial stability.
The launch of PayPal’s stablecoin without a robust federal framework for regulation, oversight, and enforcement has drawn criticism from Democratic Congresswoman Maxine Waters. Her concerns revolve around the need to protect users and mitigate potential risks to financial stability. While efforts to draft legislation have been underway, the advancement of a separate bill by Republican committee members has raised concerns for Waters. Nevertheless, the Congresswoman remains skeptical about the bill’s chances of becoming law and is calling for bipartisan negotiations to address the challenges posed by stablecoins effectively.
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