PayPal has confirmed it has received a subpoena by the US Securities and Exchange Commission (SEC) in regards to its PYUSD stablecoin.
Announced during PayPal’s quarterly earnings report this week, the subpoena requests documentation from the global payments firm on the stablecoin without going into more detail.
The filing stated: “On November 1, 2023, we received a subpoena from the U.S. SEC Division of Enforcement relating to PayPal USD stablecoin. The subpoena requests the production of documents. We are cooperating with the SEC in connection with this request.”
PayPal became the first prominent financial service to launch its own native stablecoin, pegged to the US dollar.
The company on the launch date of PYUSD outlined that the stablecoin would be used as a form of currency to exchange over its services for person-to-person transactions, as well as an instrument to be transferred to its fiat currency counterpart.
Being a highly-popular payment service, with hundreds of millions of users, US government officials have kept a wary eye on the development of PYUSD and its disruption in the US financial system.
Maxine Waters, Democratic Head of the House Financial Service Committee, was critical of PayPal’s stablecoin venture, revealing she was ‘deeply concerned’ about its place in the financial system and the lack of regulation surrounding stablecoins.
Stablecoins and cryptocurrencies as a whole have endured intensified legal battles from the SEC this year, with the financial regulator’s head Gary Gensler vehemently believing that cryptocurrencies are a form of security and should fall under traditional US financial rules.
Stablecoin issuer Circle – which issues the most popular stablecoin on the market; USDC – defended these claims in the SEC’s ongoing battle with Binance, arguing that because stablecoins are pegged to a fiat currency, they should not fall under traditional jurisdiction.
During a panel discussion at SBC Summit Barcelona, Managing Director of Damex.io, Samuel Rondot, believes PayPal’s stablecoin venture is a good first step into breaking into widespread adoption of cryptocurrencies.
He said: “I think it’s extremely interesting to see those big actors (PayPal) embracing the technology. We need a user-friendly solution, we need an easy way in and out of the digital asset world and it’s a good first move.”