PayPal Facing SEC Action Over PYUSD Stablecoin: An Overview of Web 3.0 Blockchain

PayPal Receives Subpoena from SEC Regarding its Stablecoin

PayPal, a payment giant, has been served with a subpoena from the United States Securities and Exchange Commission (SEC) in connection with its U.S. dollar-pegged stablecoin, PYUSD.

The SEC’s Enforcement division issued the subpoena to PayPal on Nov. 1, requesting certain documents. In response, PayPal has declared that it is cooperating with the SEC.

The subpoena was issued three months after PayPal launched its PYUSD stablecoin in early August. The stablecoin is powered by the Ethereum blockchain and is designed to facilitate digital payments and Web3 projects. It is issued by Paxos Trust and backed by U.S. dollar deposits, short-term Treasurys and similar cash equivalents.

PayPal’s Successful Rollout of PYUSD

Paxos’ spokesperson reported that PYUSD has seen a successful rollout since its launch two months ago, with a market capitalization of $150 million. Currently, its market cap is valued at $159 million, and it has a daily trading volume of nearly $2.7 million, according to CoinGecko data.

PayPal has yet to respond to Cointelegraph’s request for comment.

The swift rise in the adoption of PayPal USD was triggered by major exchanges such as Coinbase, Crypto.com, Bitstamp, and Kraken listing the stablecoin on their platforms shortly after its launch. In September, PayPal announced its plan to integrate PYUSD into the Venmo mobile payment service, allowing users to purchase and send the stablecoin to their contacts.

Apart from expanding its crypto services in the U.S., PayPal is also making progress in other countries. On October 31, the company obtained a license from the United Kingdom Financial Conduct Authority to provide web 3.0 blockchain services in the country.

The SEC’s latest action against PayPal serves as further proof that the US is a challenging landscape for crypto firms. The regulator has taken legal action against a number of leading players in the cryptocurrency space, including its ongoing lawsuit against Coinbase exchange. In October 2023, the SEC finally moved to dismiss its three-year lawsuit against Ripple, the developers of the XRP (XRP) token, one of the most highly valued cryptocurrencies by market capitalization.

In April 2023, Circle CEO Jeremy Allaire argued that the crackdown on cryptocurrencies by US regulators had been a major factor in the declining market capitalization of Circle’s USD Coin (USDC) stablecoin.

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