PayPal’s Stablecoin Is No Libra. Why the Timing Feels Right

This week, Rep. Maxine Waters, (D-CA) declared she was “deeply concerned” with payments giant PayPal for launching a stablecoin under the New York Department of Financial Services regulatory framework before federal legislation addressing such crypto instruments has been debated. The moment had echoes of the battle over the doomed Libra project, which Waters also vehemently opposed.

But the circumstances are quite different from four years ago, when Facebook, now known as Meta, rolled out a basket-based stablecoin to a barrage of regulator criticism around the world. The attacks were so heavy they ultimately stymied Libra’s advance, leaving it to wither and die, even after a radical redesign intended to appease regulators and a name change to Diem.

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Libra was one of those rare issues that generated bipartisanship – in opposition to the project, rather than for it – in part because at that time other concerns about Facebook’s treatment of user data had turned it, briefly, into a pariah for politicians.

By contrast, the stablecoin industry now seems to have won over a decent number of backers in Congress, mostly from one side. Last month, House Republicans successfully pushed stablecoin legislation through the House Financial Services Committee. And, while its passage was more contentious than many had hoped, with Waters herself leading Democrat resistance, the bill seems likely to win support in the Republican-controlled House when it goes to a floor vote.

PayPal has now complicated the outlook for this bill’s passage through the Senate. I tend to agree with observers, cited in a piece by CoinDesk’s Jesse Hamilton this week, who argued that PayPal, in upsetting Democrats by jumping the gun on the legislation, will harden the resolve of the party’s anti-crypto crusaders in the Senate, such as Sen. Elizabeth Warren (D-MA). And that could halt the bill’s passage in the upper chamber, where Warren’s party controls the majority.

But in the grand scheme of things, PayPal’s project is in a far stronger position politically than the…