PayPal announced on Thursday that it had received a subpoena from the EC over its PayPal USD (PYUSD) stablecoin. A subpoena is a court order requesting documents, testimony, or other forms of evidence during an investigation.
PayPal launched PYUSD in August. But it appears the new stablecoin has caught the attention of US regulators, who are keen on regulating the stablecoin market. Let’s discover more about it.
Paypal’s Stablecoin is Getting Observations From The SEC
Stablecoins are cryptocurrencies that are pegged to the price of fiat currency. In most cases, it is the US dollar. Others are pegged to the pound or euro.
⚡️Paypal received a subpoena from U.S. SEC division of enforcement relating to Paypal usd stablecoin.
— Americas Friend (@FriendAmericas) November 3, 2023
A PayPal spokesperson confirmed on Thursday that the company intends to collaborate with the SEC’s demands. The PYUSD is an Ethereum-based stablecoin issued by Paxos, backed by treasuries, dollar deposits, and other cash equivalents.
The stablecoin market is highly competitive. But Paxos claims PYUSD has received huge adoption since its launch three months ago. A core reason for this adoption is that PYUSD is listed on top exchanges such as Coinbase.
In September, PayPal released PYUSD on Venmo to expand its reach to users. Also, users can leverage the PayPal app to buy and sell PYUSD. They can also convert it to other cryptocurrencies like Bitcoin, send it to friends within the US, or pay for items.
Why is the SEC Against stablecoins?
The news of the SEC’s subpoena of PayPal sparked concerns within the crypto world. It appears Washington is threatened by the stablecoin market. Some US officials are concerned that a token associated with a top tech company could see heavy adoption and endanger the stability of the US financial system.
— sumino.eth (@AurelienOnimus) August 7, 2023
PayPal is one of the many tech companies targeted by US regulators. Most companies targeted by the SEC are crypto-native. However, PayPal is the major US financial organization that releases stablecoins for payments. The stablecoin market is currently under scrutiny. One of the biggest stablecoin issuers, Circle, failed to go public due to concerns raised by the SEC.
It’s also public knowledge that Gary Gensler, the chair of the SEC, is against stablecoins. Gensler previously warned of the systematic risk that these digital assets pose to financial stability. Circle’s CEO, Jeremy Allaire, believes the SEC is outside of its jurisdiction in its attempt to regulate the stablecoin market. Allaire argued that stablecoins focus on payments.
While the US has adopted a tough stance on crypto regulations, other regions are developing friendly policies. And are seeing an influx of crypto projects. A new research ranked the UK as the fastest-growing crypto hub. The report also named London as the most crypto-friendly city. The US stands at risk of losing out to other nations in the race for the crypto industry.