PayPal, a prominent payment company, has been served a subpoena by the United States Securities and Exchange Commission (SEC) regarding its U.S. dollar-pegged stablecoin.
As disclosed in the firm’s Q3 financial report with the SEC on Nov. 2, the SEC’s Enforcement Division issued a subpoena to PayPal regarding its PayPal USD stablecoin. PayPal confirmed that they received the subpoena on Nov. 1, requesting the production of specific documents. The company stated its cooperation with the SEC in fulfilling this request.
Approximately three months after the launch of its PYUSD stablecoin in early August, the SEC’s action has come into effect. This stablecoin, backed by U.S. dollar deposits, short-term Treasury bills, and similar cash equivalents, is issued by Paxos Trust and functions on the Ethereum blockchain. Aimed at digital payments and Web3, PYUSD, according to Paxos, has experienced successful adoption, reaching a $150 million market capitalization within two months of its launch. Currently, the market cap of PYUSD stands at approximately $159 million, with a daily trading volume of nearly $2.7 million, based on CoinGecko data.
The expansion of PayPal USD’s usage surged notably after major exchanges such as Coinbase, Crypto.com, Bitstamp, and Kraken listed the stablecoin on their platforms shortly after its introduction. PayPal also announced plans in September to integrate the PYUSD stablecoin into the Venmo mobile payment service, allowing users to purchase PYUSD and send it to friends and family.
While PayPal advances its crypto ventures in the U.S. and receives regulatory approval for crypto services in the U.K., the recent SEC action against PayPal reflects the challenges faced by crypto companies in the United States. The SEC has initiated legal actions against numerous significant local crypto companies, including an ongoing lawsuit against the Coinbase exchange. In October 2023, the SEC sought to dismiss its three-year lawsuit against Ripple, the company behind the XRP token, one of the largest cryptocurrencies by market cap.
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