- Without proper legislation, there is a greater risk of harm.
- PayPal launched its stablecoin PYUSD on August 7, 2023.
PayPal is facing the heat for its new stablecoin barely a week into its launch. Representative Maxine Waters said that it was concerning that PYUSD was launched amid a lack of regulations and enforcement for such assets, in a statement in a House Committee of Financial Services press release on August 9, 2023.
Maxine Waters Goes After PYUSD
Democrat Maxine says, “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.” She laid emphasis on the fact that the current user base of the platform is an essential aspect to consider stablecoin assessment for consumer safety.
Regulators are on the crypto sector’s tail for a long time. Lack of regulations in the industry renders it harmful for the people investing their money in projects.
Waters highlights the long standing demand for clear regulations designed for digital assets in the wake of the crypto revolution. However, the concerned regulatory agencies, especially the Securities and Exchange Commission (SEC), has enforced via lawsuits against digital asset services companies.
The ranking member is working with other Democrats in the Financial Committee on assessment of consumer safety. Maxine Waters recalled that the President’s Working Group on Financial Markets stressed on the Federal Bank’s authority over digital assets, not the states’.
The Financial Committee on July 27, 2023, introduced 7 legislative pieces for stablecoin regulations. Waters called the move “toxic and problematic.” Furthermore, it could pose a greater harm to consumer safety. President of the Committee, Patrick McHenry, proposed Clarity for Payment Stablecoins Act of 2023 among them.
President McHenry radiates a different sentiment from Waters. Following PYUSD launch, he said “stablecoins hold promise as a pillar of our 21st century payments system.” Additionally, he suggested Congress should introduce comprehensive regulations for digital assets.
User Trust Has Declined
Stellar Development Foundation CEO, Denelle Dixon, hopes major organizations would leverage blockchain in future like PayPal did. PayPal launched its stablecoin in a collaboration with Paxos Trust Company, the issuer of Paxos Dollar (USDP).
Source: Stellar Development Foundation CEO on PayPal’s PYUSD on X
Stablecoins are a preferred choice of cryptocurrency when it comes to tackling market volatility. However, since the collapse of Terra UST ecosystem in May 2022, user trust has declined significantly. The stablecoin’s value plunged to around 10 cents.
In February, news agency Reuters wrote in an analysis that regulators are raising questions regarding stablecoin usage. Recently, the United Kingdom Treasury published a consultation response to its call for evidence and consultation last year. Authorities propose systematic stablecoins be supervised by the Bank of England and Financial Conduct Authority (FCA).