HomeEtherumSEC Subpoenas PayPal over PYUSD Stablecoin with $156M Market Cap

SEC Subpoenas PayPal over PYUSD Stablecoin with $156M Market Cap

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PayPal has disclosed that it received a subpoena from the Securities and Exchange Commission (SEC) related to its U.S. dollar stablecoin, PYUSD. This development highlights the growing intersection of traditional finance and digital currencies. As reported by Reuters, PayPal made headlines in August by becoming the first tech giant to embrace digital currencies for payments and transfers.

PayPal entered the world of digital currencies with the launch of PayPal USD (PYUSD), a stablecoin that is fully backed by U.S. dollar deposits, U.S. Treasuries, and similar cash equivalents, as previously reported by CryptoSlate in August.

PayPal faces challenges outside the U.S.

However, PayPal has encountered roadblocks in this new frontier. Despite registering with the Financial Conduct Authority (FCA) in the United Kingdom to offer crypto services, PayPal faces several restrictions in its crypto activities. These include limitations on new customer acquisitions, expanding its current offering in crypto assets, and operating an automated process to exchange crypto assets for money without the approval of the FCA.

These restrictions shed light on the global regulatory climate surrounding crypto activities. On Oct. 31, the U.K. Treasury proposed integrating crypto activities into financial services regulation, requiring authorization from the FCA for all crypto-related firms operating in the country. This regulatory trend can be observed in multiple jurisdictions worldwide, highlighting the complex challenges that corporations like PayPal must navigate.

The challenge for PayPal PYUSD vs SEC.

PayPal’s PYUSD, an ERC-20 token issued on the Ethereum blockchain, was created to bridge the gap between fiat and digital currencies for consumers, merchants, and developers. However, the SEC subpoena reveals the regulatory obligations that must be addressed to achieve this objective.

Transparency is crucial in navigating these challenges. Paxos Trust Company, which oversees the issuance of PayPal USD, has committed to publishing a public monthly Reserve Report for PayPal USD starting from Sept. 2023. This report provides transparency regarding the reserves for PayPal USD, further reinforced by a third-party attestation of the value of PayPal USD reserve assets.

The recent SEC subpoena received by PayPal, relating to its stablecoin PYUSD, highlights the complex relationship between fintech innovation and inconsistent regulatory oversight from the SEC. This exemplifies the challenges faced by major firms entering the evolving world of digital currencies and the constant adaptation required to navigate the global regulatory landscape.

As the digital payment revolution continues, entities like PayPal are making significant strides towards a more integrated digital economy, despite the accompanying regulatory complexities.

According to CryptoSlate data, PYUSD currently has a market capitalization of $158.93 million and a 24-hour trading volume of $7.2 million.

CryptoSlate is awaiting a response from PayPal regarding this statement.

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