SEC Investigation into PayPal’s Stablecoin
- PayPal has received a subpoena from the SEC for its USD stablecoin, PYUSD.
- The payment giant is collaborating with the SEC, following a request for documents related to PYUSD.
- PayPal’s entry into the stablecoin space raises concerns in Washington.
PayPal revealed in its quarterly earnings report that it received a subpoena from the US Securities and Exchange Commission’s Division of Enforcement on November 1, 2023, regarding its stablecoin PayPal USD. This subpoena demands the production of documents, a request that the company claims to be fully cooperating with. PayPal’s involvement in the stablecoin space, with the launch of its own dollar-backed token, PYUSD, is drawing regulatory attention.
On November 1, 2023, we received a subpoena from the US Securities and Exchange Commission’s Division of Enforcement regarding the PayPal USD stablecoin. The subpoena requests the production of documents. We are cooperating with the SEC in connection with this request.
A Precedent that Worries Washington
The announcement of PayPal introducing a stablecoin has resonated in Washington, reminiscent of Facebook’s unsuccessful Libra initiative, now Meta Platforms (META). PayPal’s stablecoin project risks exacerbating already existing divisions in the US Congress. Lawmakers like Representative Maxine Waters, a prominent member of the House Financial Services Committee, have expressed concerns, suggesting that stablecoin legislation could allow large tech companies to dominate the sector, which she deems dangerous.
PayPal and Stablecoins: A Progressive Expansion
PayPal has launched PYUSD, an Ethereum-based token, initially offered to customers of its online payment service before expanding it to its Venmo app. Since 2020, PayPal has allowed its users to buy and sell cryptocurrencies, and extended this service to Venmo in April 2021. In 2022, the company started enabling users to transfer their crypto assets to third-party wallets, a functionality that was extended to Venmo in April 2023.