House Financial Services Chair McHenry Touts Bipartisan Stablecoin Legislation
Commentary by Steven Lofchie
House Financial Services Committee Chair Patrick McHenry (R-NC) touted the bipartisan Clarity for Payment Stablecoins Act recently passed by the Committee. He stated that the Act creates "a clear regulatory framework for the issuance of payment stablecoins" and "recognizes the strong role that states have played in regulating digital asset firms".
In a public statement, Chair McHenry, responding to the August 7, 2023 launch of PayPal's U.S. dollar-denominated stablecoin, PayPal USD (PYUSD), said that PayPal's "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."
At its launch, PayPal highlighted that the new stablecoin would be backed 100 percent by U.S. dollar deposits and short-term U.S. Treasuries. PayPal said that its users will be able to transfer the stablecoin between PayPal and compatible external wallets, send person-to-person payments, fund purchases and convert cryptocurrencies that are supported by PayPal to and from the stablecoin.
Commentary
PayPal really looks to be doing stablecoins the right way: all the money either in cash or U.S. Governments, 100 percent USD backing, full convertibility, assets held in a U.S. regulated financial institution.
This kind of stablecoin should make it much harder for the U.S. regulators to continue their regulation of digital assets only through enforcement actions. Of course, stablecoins are an easier product to understand and regulate than cryptocurrencies, but it's a start.