PayPal Subpoenaed by SEC Over USD Stablecoin
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, which was disclosed on Nov. 2 in its Q3 financial report with the SEC.
Cooperation with the SEC
The subpoena, received by PayPal on Nov. 1, requested certain documents from the company. PayPal stated that it is cooperating with the SEC regarding this request.
PYUSD Stablecoin and Market Performance
PayPal launched its PYUSD stablecoin in early August, which is issued by Paxos Trust and backed by U.S. dollar deposits, short-term Treasurys, and similar cash equivalents. PYUSD operates on the Ethereum blockchain and facilitates digital payments and Web3 transactions.
PYUSD has experienced a successful rollout, reaching a $150 million market capitalization within two months of its launch. Currently, it has a market cap of approximately $159 million with a daily trading volume of nearly $2.7 million, according to CoinGecko.
PayPal’s Crypto Expansion and Regulatory Challenges
In addition to its efforts in the United States, PayPal has been making progress with crypto initiatives in other countries. It recently obtained a license from the United Kingdom Financial Conduct Authority to offer crypto services in the country.
The SEC’s subpoena against PayPal highlights the challenging regulatory environment for crypto companies in the United States. The SEC has filed lawsuits against several prominent crypto companies, including Coinbase. However, it dismissed its three-year lawsuit against Ripple in October 2023.
Hot Take: Regulatory Scrutiny Impacts Crypto Market
The SEC’s action against PayPal adds to the evidence that the U.S. regulatory landscape poses difficulties for crypto companies. This scrutiny has had an impact on market capitalization, as seen with Circle’s USD Coin (USDC) stablecoin. The crackdown by U.S. regulators was cited as a significant factor in the declining market cap of USDC.
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