May 19, 2024

PayPal faces SEC action related to PYUSD stablecoin: Official

PayPal was the first large fintech firm to adopt digital currencies for payments and transfers after launching its stablecoin in August.

Payment giant PayPal has received a subpoena from the United States Securities and Exchange Commission (SEC) regarding its U.S. dollar-pegged stablecoin.

The Enforcement division of the SEC has sent a subpoena to PayPal related to its PayPal USD (PYUSD) stablecoin, the firm officially disclosed on Nov. 2 in its Q3 financial report with the SEC.

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.

The action comes about three months after PayPal launched its PYUSD stablecoin in early August. The stablecoin is issued by Paxos Trust and backed by U.S. dollar deposits, short-term Treasurys and similar cash equivalents. PYUSD is based on the Ethereum blockchain and is aimed at handling digital payments and Web3.

According to a spokesperson for Paxos, PYUSD has seen a successful rollout so far, reaching a $150 million market capitalization in the two months since its launch. At the time of writing, the market cap of PYUSD is valued at about $159 million, with almost $2.7 million in daily trading volume, according to data from CoinGecko.

PayPal USD (PYUSD) stablecoin info. Source: CoinGecko

PayPal did not immediately respond to Cointelegraph’s request for comment.

The sharp rise in the adoption of PayPal USD came amid major exchanges like Coinbase, Crypto.com, Bitstamp and Kraken listing the stablecoin on their platforms soon after its launch. In September, PayPal announced the upcoming integration of the PYUSD stablecoin into the Venmo mobile payment service, allowing users to purchase PYUSD and send it to friends and family.

Apart from aggressively moving into crypto in the United States, PayPal has also been progressing with crypto initiatives in other countries. On Oct. 31, PayPal received a license from the United Kingdom Financial Conduct Authority to offer crypto services in the country.

Related: Gary Gensler teases details of SEC’s $5B take from enforcement actions, shades crypto

The latest SEC action against PayPal is more evidence that the U.S. is a difficult environment for crypto companies. The regulator has sued several of the largest local companies in the crypto industry, including its ongoing lawsuit against Coinbase exchange. In October 2023, the SEC finally moved to dismiss its three-year lawsuit against Ripple, the company behind the XRP (XRP) token, one of the largest cryptocurrencies by market cap.

In April 2023, Circle CEO Jeremy Allaire argued that a cryptocurrency crackdown by U.S. regulators had been a significant factor behind the declining market capitalization of Circle’s USD Coin (USDC) stablecoin.

Magazine: Crypto regulation — Does SEC Chair Gary Gensler have the final say?

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