Global payments giant PayPal is currently under regulatory scrutiny by the U.S. Securities and Exchange Commission (US SEC) in connection with its USD stablecoin, PayPal USD (PYUSD).
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- On November 1, 2023, PayPal disclosed in its quarterly earnings report that it had received a subpoena from the U.S. SEC’s Division of Enforcement requesting documentation related to its USD stablecoin.
- The company has stated that it is cooperating with the U.S. regulator in connection with this request.
Background: What is PYUSD?
PYUSD is a U.S. dollar-pegged stablecoin that PayPal launched in August, marking the first time a major financial services firm has entered the market with such a product.
- PYUSD is issued by Paxos Trust and is backed by U.S. dollar deposits, short-term Treasurys, and similar cash equivalents.
- The stablecoin is based on the Ethereum blockchain and is aimed at handling digital payments and web3 applications.
- Since its launch, PYUSD has seen a successful rollout, reaching a market capitalization of $159 million with almost $2.7 million in daily trading volume.
Enter the U.S. SEC
The launch of PayPal’s stablecoin has raised concerns among U.S. regulators, who fear that a token tied to a major tech platform could expand quickly to wide usage and pose a threat to U.S. financial stability.
- The SEC has been actively regulating the crypto industry in the U.S., with ongoing lawsuits against several of the largest local crypto companies, including Coinbase.
- In September, stablecoin issuer Circle intervened in the SEC’s case against Binance, arguing that financial trading laws shouldn’t apply to stablecoins.
- U.S. SEC has also charged Binance for violation of the country’s security laws.
Most recently, PayPal’s move into crypto is not limited to the U.S. On October 31, the company received a license from the United Kingdom Financial Conduct Authority to offer crypto services in the country.
This article is published in BitPinas: PayPal Faces US SEC Subpoena Over PYUSD Stablecoin
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