- November 4, 2023
- Posted by: [email protected]
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PayPal, a payment industry giant that made waves by becoming one of the first major fintech companies to embrace digital currencies for payments and transfers, now finds itself facing scrutiny from the United States Securities and Exchange Commission (SEC) in relation to its U.S. dollar-pegged stablecoin.
The SEC’s Enforcement Division issued a subpoena to PayPal concerning its PayPal USD stablecoin, a revelation officially disclosed in PayPal’s Q3 financial report submitted to the SEC on November 2. The subpoena was delivered to PayPal on November 1, and it sought specific documents, according to the company. PayPal has stated that it is fully cooperating with the SEC’s request.
This development arrives approximately three months after PayPal’s debut of its PYUSD stablecoin in early August. The stablecoin is issued by Paxos Trust and is backed by U.S. dollar deposits, short-term Treasurys, and similar cash equivalents. PYUSD is built on the Ethereum blockchain and is designed for facilitating digital payments and engaging with Web3 applications.
PYUSD’s launch appears to have been met with success, as it achieved a $150 million market capitalization within two months of its introduction. As of the time of this writing, the market cap of PYUSD is valued at about $159 million, with a daily trading volume of nearly $2.7 million, as per data from CoinGecko.
At the time of this disclosure, PayPal had not provided a response to Cointelegraph’s request for comments regarding the SEC’s actions.
The rapid adoption of PayPal’s USD-pegged stablecoin was aided by its swift inclusion on major cryptocurrency exchanges like Coinbase, Crypto.com, Bitstamp, and Kraken shortly after its launch. In September, PayPal announced its plans to integrate the PYUSD stablecoin into the Venmo mobile payment service, permitting users to acquire PYUSD and send it to friends and family.
In addition to making significant inroads into the cryptocurrency space in the United States, PayPal has been actively advancing its cryptocurrency initiatives in other nations as well. On October 31, the United Kingdom’s Financial Conduct Authority granted PayPal a license to offer crypto services within the country.
This latest SEC action against PayPal is indicative of the challenging regulatory landscape for cryptocurrency companies in the United States. The SEC has initiated legal actions against several major domestic companies within the crypto industry, including an ongoing lawsuit against Coinbase. In a notable development, the SEC moved to dismiss its three-year lawsuit against Ripple, the company behind the XRP token, one of the largest cryptocurrencies by market capitalization, in October 2023.
Back in April 2023, Circle CEO Jeremy Allaire suggested that a regulatory crackdown on cryptocurrencies by U.S. authorities had contributed to the decreasing market capitalization of Circle’s USD Coin stablecoin, shedding light on the persistent regulatory pressures faced by the industry.
