David Schwartz doesn’t seem surprised that the Federal Reserve reacted negatively to PayPal’s new stablecoin.
Ripple Chief Technology Officer (CTO) David Schwartz commented on the Federal Reserve’s increasingly stringent regulatory requirements for the country’s cryptocurrency environment.
Schwartz tweeted This was a shady remark referring to PayPal’s newly launched stablecoin (PYUSD) and whether the company has received the necessary approvals. In a recent tweet, John Reed Stark, president of consulting firm John Reed Stark, commented on the new announcements from the Federal Reserve. Top banks and regulators have now required all state banks under the Federal Reserve System to receive a written supervisory no-objection from regulators before handling stablecoins. This covers all transactions, including holding, issuing or otherwise trading in stablecoins.
The announcement also explains the Fed’s expectations for obtaining a no-objection process. It says:
“In order to obtain a written notice of supervisory non-objection, a national member bank shall demonstrate that it has established appropriate risk management practices for the proposed activities, including having adequate systems in place to identify, measure, monitor, and control the risks of its activities and the ability to do so on an ongoing basis.”
In response to Schwartz’s comments about the announcement, the Ripple CTO was asked if PayPal had the approvals it needed. Schwartz responded that the Federal Reserve was not on the list of regulatory approvals PayPal needed. Although somewhat slyly, the same account then asked Schwartz if PayPal had the right political connections to “cover all sides.” Schwartz then responded that “they do, too,” which could be another sly response from PayPal.
Schwartz's response to Fed's request
Schwartz described the Fed’s questions as “challengers,” suggesting there could be issues with the requirements. The Fed has identified a number of risks and expects banks interested in stablecoin trading to address them. According to the publication, those risks include operational, cybersecurity, liquidity, illicit finance, and consumer compliance risks. The Fed said all banks must notify regulators before engaging in any stablecoin-related activities, including testing. The Fed also said it will continue supervisory review and “enhanced monitoring” of these activities even after issuing a no objection.
Reactions continue to pour in after PayPal launched PYUSD. Yesterday, CoinSpokesman reported that the leadership of the U.S. House Financial Services Committee may have mixed feelings about PayPal’s stablecoin. Reps. Maxine Waters and Patrick McHenry both called for a solid regulatory framework to guide these stablecoins. However, Waters warned that there are inherent risks.
She said a regulatory framework is necessary to ensure companies are compliant. She also said it is necessary to protect customers. Waters said regulation is crucial, mainly because PayPal has 435 million customers worldwide and more online accounts than major banks. McHenry, on the other hand, is more favorable. Although he also believes in the regulatory framework, the chairman has a different view on stablecoins. McHenry described them as "the backbone of our 21st century payment system." #Ripple #美联储