Key takeaways :
- PayPal confirmed it received a subpoena from the U.S. Securities and Exchange Commission (SEC) regarding its USD stablecoin, PYUSD.
- The company introduced PYUSD, a U.S. dollar-pegged stablecoin, in August, but additional details about the subpoena remain undisclosed.
In a recent quarterly report, global payments giant PayPal disclosed that it has received a subpoena from the U.S. Securities and Exchange Commission (SEC) regarding its PYUSD stablecoin. This development highlights the regulatory attention the SEC is placing on PayPal’s new digital token.
Launched on August 7, PYUSD was designed to facilitate faster and more cost-effective payments within PayPal’s platform. This stablecoin is pegged to the U.S. dollar and backed by cash deposits held by Paxos Trust Company.
It offers users the ability to buy and sell PYUSD, convert it into other cryptocurrencies like Bitcoin, make purchases at numerous online retailers, send stablecoins to friends within the U.S. via PayPal without fees, and transfer tokens to external Ethereum wallets.
PayPal’s entry into the world of stablecoins marks a significant moment, as it became the first major U.S. financial institution to launch stablecoins for payments and transfers. The move has brought it under the regulatory scrutiny of U.S. authorities.
On November 1, 2023, PayPal received a subpoena from the U.S. SEC Division of Enforcement related to its PayPal USD stablecoin, as disclosed in a Form 10-Q filed with the SEC.
While the extent of the subpoena remains unclear, it is evident that the regulator is seeking documents, and PayPal has affirmed its active cooperation with the SEC in response to this request.
This development signifies the evolving landscape of digital currencies and the increasing interest of regulatory bodies in overseeing the activities of both crypto-native players and established financial institutions in the digital currency space. PayPal’s response to this inquiry will be closely monitored as the company navigates this new phase of regulatory scrutiny.
With the future of PYUSD, PayPal’s stablecoin, now in question, the company may need to reassess its ambitions in the Web3 space.
Dan Schulman, PayPal’s President and CEO, emphasized the importance of stable instruments seamlessly connected to fiat currency in the context of the digital currency shift. He mentioned the company’s commitment to responsible innovation and compliance, highlighting their ability to introduce new customer experiences and contribute to the growth of digital payments through PayPal USD.