In a surprising turn of events, PayPal (PYPL) recently found itself on the receiving end of a subpoena from the U.S. Securities and Exchange Commission (SEC) concerning its USD stablecoin.
The renowned global payment giant unveiled its U.S. dollar-pegged stablecoin, PayPal USD (PYUSD), back in August, marking the foray of a major financial services firm into the stablecoin realm.
The subpoena, disclosed in PayPal’s quarterly earnings report, arrived on November 1, 2023, with the SEC Division of Enforcement requesting documentation related to the PayPal USD stablecoin.
While specific details remain scarce, PayPal reassured stakeholders of its cooperation with the SEC in response to the subpoena.
The entrance of PayPal into the stablecoin arena bears significance as it marks the maiden offering of its kind by a major financial institution. However, this move stirred echoes of the past, reminding some of Facebook’s ill-fated Libra stablecoin, now under the umbrella of Meta Platforms (META).
The concern voiced by certain U.S. regulators was that a token linked to a tech powerhouse could swiftly amass widespread adoption, potentially posing a threat to the stability of the U.S. financial system.
It is worth noting that PYUSD, an Ethereum-based token, initially targeted online payment customers before extending its reach to PayPal’s Venmo app.
PayPal has been enabling customers to buy and sell cryptocurrencies since 2020, expanding this service to Venmo in April 2021.
In 2022, PayPal further allowed users to transfer their crypto assets to third-party wallets, extending this capability to Venmo in April 2023.
