PayPal Faces US SEC Subpoena Over PYUSD Stablecoin

Republished By Plato

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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).

Key facts:

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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