The global payments behemoth PayPal (PYPL) announced in a filing that it had received a subpoena from the U.S. Securities and Exchange Commission (SEC) seeking documentation regarding its USD stablecoin. No additional information was provided.
In August, the company launched PayPal USD (PYUSD), a stablecoin backed by the US dollar.
In its quarterly earnings report, which was submitted on Wednesday, PayPal stated, “On November 1, 2023, we received a subpoena from the U.S. SEC Division of Enforcement relating to PayPal USD stablecoin.” “The subpoena demands that documents be produced. In relation to this request, we are assisting the SEC.”
The first stablecoin from a significant financial services company was PayPal’s. The announcement sparked concerns in Washington because it brought to mind Facebook’s (now-Meta Platforms) failed attempt to launch the Libra stablecoin. Some US regulators are concerned that a token associated with a large tech platform may spread swiftly to become widely used and endanger the stability of the US financial system.
PayPal’s stablecoin posed a threat to further polarise the already polarised congressional discussion over cryptocurrency legislation. A stablecoin bill, according to some lawmakers, would enable big tech to dominate that area of the cryptocurrency market, said Rep. Maxine Waters (D-Calif.), the ranking Democrat on the House Financial Services Committee. The advent of PayPal provided a real-world illustration of that potential.
Stablecoin issuer Circle entered the SEC case against Binance in September, claiming that since stablecoins’ value is correlated with other assets, financial trading regulations shouldn’t be applied to them.
Prior to being added to the company’s Venmo app, online payment users could obtain PYUSD, an Ethereum-based token. Since 2020, PayPal users have been able to purchase and sell cryptocurrencies. It has permitted the same Venmo service since April 2021. PayPal started letting users move their cryptocurrency holdings to external wallets in 2022, and in April 2023, Venmo joined the fold.