Looking back to the end of July, a common goal within House Financial Services Committee republicans was realized with the passing of a bipartisan stablecoins bill. However, it wasn’t reached with the broad bipartisan agreement that the committee chair, Pat McHenry, had aimed to attain. Discord arising from the age-old issue of federal vs. state regulation in this new landscape formed a potential barrier to the legislation, which found support from the chair, the ranking member Maxine Waters, and the residence of 1600 Pennsylvania Avenue, namely, the Biden White House.
Enter stage left, PayPal and Paxos. Out of the blue, the much-anticipated unveiling of PYUSD, a possible catalyst to broker a compromise in our capitol, and subsequently lead to a comprehensive regulated framework for stablecoins. This could be a paradigm shift in American fintech companies’ approach to dealing with federal authorities and their watchdogs.
To comprehend why PYUSD’s launch is of great significance, one needs to acknowledge its origin; fresh from the stable of one of the world’s top digital payment companies, boasting 430 million accounts. This makes the potential for crypto adoption not only wider but quicker and the ecosystem slightly more resistant to regulation through Congressional action.
For context, the landscape in 2021/2022 saw an effort by the federal government towards a comprehensive regulatory framework for stablecoins, while a significant market player like Meta (formerly Facebook), tried to establish a stablecoin project. Despite its subsequent failure, this kind of initiative presents challenges for regulation: notably, the current absence of a regulatory framework for stablecoins, creating an environment in regulatory limbo.
PayPal, however, isn’t Meta, yet the idea of an influx of users finding easy access to a stablecoin on a familiar platform puts lawmakers on the spot to forge ahead on stablecoin regulation, a sense of urgency previously nonexistent. Prior to PYUSD’s introduction, the stablecoin market remained relatively unchanging with the same actors and level of adoption. Nevertheless, with hundreds of millions of PayPal users on the cusp of gaining access to a crypto asset, those who previously resisted McHenry’s stablecoins bill may have to review their stance.
Some Democratic policymakers need to rethink their legislative and regulatory approach, following the launch of PYUSD. This could signal a shift in how American crypto market participants engage with D.C. A strategy of seeking approval before launching could actually be replaced with a bold, “we’re here, now accommodate us” stance.
This approach could mark a new era of American crypto companies no longer asking for permission, but demanding inclusion, with the potential user base of hundreds of millions accelerating crypto adoption and elevating stablecoins to an everyday aspect of our economic life.
A key factor to remember here is that leveraging policy change isn’t always about winning with superior ideas, but rather power. An observation from years of federal service is, more often than not, those who wield power get their way in Washington, and those who don’t, well, they don’t. Now, advocates of stablecoins and market participants have more leverage over the federal government. This leverage may accelerate a comprehensive regulatory framework for stablecoins in Congress, ushering a new era where American crypto companies can negotiate on their own terms.
Source: Coindesk
