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SEC subpoenas PayPal over its USD-pegged stablecoin

PayPal PayPal, the global payments leader, is currently facing scrutiny from the U.S. Securities and Exchange Commission (US SEC) regarding its PayPal USD (PYUSD) stablecoin.What is PYUSD?PYUSD is a stablecoin pegged to the U.S. dollar, introduced by PayPal in August. This marked a significant milestone as a major financial services firm ventured into this market
PayPal, the global payments leader, is currently facing scrutiny from the U.S. Securities and Exchange Commission (US SEC) regarding its PayPal USD (PYUSD) stablecoin.

What is PYUSD?
PYUSD is a stablecoin pegged to the U.S. dollar, introduced by PayPal in August. This marked a significant milestone as a major financial services firm ventured into this market segment.

PYUSD is issued by Paxos Trust and is backed by U.S. dollar deposits, short-term Treasuries, and similar cash equivalents. It operates on the Ethereum blockchain, primarily designed for digital payments and web3 applications.

Since its launch, PYUSD has enjoyed a successful rollout, achieving a market capitalization of $159 million, with a daily trading volume of nearly $2.7 million.

What Is PayPal Stablecoin? Can It Compete With USDT And USDC?

The Launch of PayPal’s stablecoin has raised concerns among U.S. regulators. They are apprehensive that a token associated with a major tech platform could gain rapid adoption and potentially pose a risk to the stability of the U.S. financial system.

The U.S. SEC’s Involvement:
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, seeking documentation related to its USD stablecoin. The company has assured its full cooperation with the U.S. regulatory body regarding this request.

The U.S. SEC has been actively involved in regulating the cryptocurrency industry within the United States. Notably, it has initiated lawsuits against several prominent domestic cryptocurrency firms, including Coinbase. In a similar vein, stablecoin issuer Circle intervened in the SEC’s legal proceedings against Binance, contending that financial trading regulations should not be applied to stablecoins. Furthermore, Binance itself has faced charges from the U.S. SEC for alleged violations of the country’s security laws.

It’s important to note that PayPal’s foray into the crypto sphere extends beyond the United States. On October 31, the company received approval from the United Kingdom Financial Conduct Authority to offer cryptocurrency services in the UK.

Wasif Shakir

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