US Congress members disagree on the way forward for stablecoins following Paypal's announcement of its own token | Credit: Shuterstoc
Key Takeaways
- US Congress members and representatives hold opposing views on stablecoins
- All government representatives agree on the necessity of clear regulations for stablecoins
Paypal is the first big name in the FinTech world to announce the launch of its own token, PYUSD, a stablecoin that pegs its value against the USD. the technology promises to encourage users to invest and trade using a digital currency, improving efficiency and financial security for users.
However, since the collapse of multiple crypto companies such as FTX, Celsius, and Terraform Labs, US politicians have been wary of allowing such companies to gather customer funds without strict government regulations.
On Wednesday, Democrat Congresswoman Maxine Waters expressed her sincere concerns regarding the emergence of PYUSD as it’s likely to gain popularity swiftly while the crypto space continues to operate without clear regulatory guidelines.
Stablecoins Require Regulation, Urgently
“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,” said Congresswoman Waters in a statement.
“Without legislation on the books that establish 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.”
Paypal is not the first tech company to develop its own crypto token. Companies such as Meta, the developer of popular social media platforms, such as Facebook and Instagram, also developed its own token, META.O .
However, considering its popularity in the money transfer market, Paypal is likely to gain investors and users faster than most tech companies entering the space.
CCN reached out to Paypal for commentary but did not receive a reply at the time of publishing.
Congress Is Divided
Two days prior, the Chairman of the House Financial Services Committee, Patrick McHenry, issued a statement following the launch of PYUSD and after the House Financial Services Committee passed the bipartisan Clarity for Payment Stablecoins Act.
“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,” reported McHenry. He also added that “Clear regulations and robust consumer protections are essential to enabling stablecoins to achieve their full potential. “
“We are currently at a crossroads to keep America at the forefront of digital asset innovation. Congress is making significant, bipartisan progress on legislation to ensure the U.S. leads the financial system of the future. We must finish the job.”
The SEC Is Against Stablecoins
Gary Gensler, Chairman of the US Securities and Exchange Commission, has made his stance on stablecoins clear on multiple occasions.
“Look, we don’t need more digital currency,” exclaimed Gensler. “We already have digital currency. It’s called the U.S. dollar. It’s called the euro or it’s called the yen; they’re all digital right now,” said Gensler in an interview.
It’s widely known among both governmental and private stakeholders in the crypto space that the SEC, currently led by Gensler, is opposed to the development of any digital currency that is not Bitcoin, Bitcoin Cash, Ethereum, or Litecoin.
