PayPal Faces SEC Action Related to PYUSD Stablecoin – PayPal, the major payment company, has been served with a subpoena by the United States Securities and Exchange Commission (SEC) in connection to its U.S. dollar-pegged stablecoin. This subpoena was officially revealed by PayPal in its Q3 financial report to the SEC on November 2, and it was sent by the SEC’s Enforcement division.
Received by PayPal on Nov. 1, the subpoena requested PayPal to produce certain documents, the firm said. “We are cooperating with the SEC regarding this request,” PayPal noted. Approximately three months following the launch of PayPal’s PYUSD stablecoin in early August, the stablecoin, which is backed by U.S. dollar deposits, short-term Treasurys, and similar cash equivalents and issued by Paxos Trust, has garnered significant attention.
PYUSD operates on the Ethereum blockchain and is primarily designed for facilitating digital payments and activities within the Web3 ecosystem. According to a spokesperson from Paxos, PYUSD has experienced a successful rollout, achieving a market capitalization of $150 million within two months of its launch. As of the current moment, PYUSD’s market capitalization stands at approximately $159 million, accompanied by a daily trading volume of nearly $2.7 million, as reported by data from CoinGecko.
The rapid surge in the adoption of PayPal USD coincided with prominent exchanges such as Coinbase, Crypto.com, Bitstamp, and Kraken swiftly adding the stablecoin to their platforms shortly after its introduction. In September, PayPal unveiled plans to integrate the PYUSD stablecoin into its Venmo mobile payment service, enabling users to acquire PYUSD and send it to their friends and family.
In addition to its assertive foray into the United States cryptocurrency market, PayPal has been advancing its crypto initiatives on a global scale. On October 31, PayPal was granted a license by the United Kingdom’s Financial Conduct Authority to offer cryptocurrency services in the country. The recent regulatory action taken by the SEC against PayPal underscores the challenging regulatory landscape for cryptocurrency companies in the United States.
The SEC has initiated legal proceedings against several prominent domestic crypto firms, including an ongoing lawsuit against the Coinbase exchange. Notably, in October 2023, the SEC took steps to dismiss a three-year lawsuit against Ripple, the company responsible for the XRP token, one of the leading cryptocurrencies by market capitalization.
Back in April 2023, Jeremy Allaire, the CEO of Circle, expressed his belief that the declining market capitalization of Circle’s USD Coin stablecoin was, in part, a consequence of increased regulatory scrutiny and measures taken by U.S. regulators in the cryptocurrency space.