Payments giant PayPal has joined the list of firms targeted by the United States regulators over engagements with digital currencies. On Thursday, the company disclosed that it had received a subpoena from the U.S. Securities and Exchange Commission (SEC) regarding its stablecoin.
PayPal’s Stablecoin PYUSD
PayPal launched its stablecoin called PYUSD in August. Issued by Paxos Trust and backed by U.S. dollar deposits, short-term Treasurys and similar cash equivalents, PYUSD is an Ethereum-based stablecoin aimed at handling digital payments and Web3.
Following its launch, the company said the digital currency solution would be gradually rolled out to users in the U.S.
Several exchanges such as Kraken, Coinbase, Crypto.com and Bitstamp adopted the stablecoin. It was also made available on Venmo in September.
The Subpoena Effect on PYUSD
Despite the news of the subpoena, PayPal did not show any sign of decline in its market value; rather, it has added nearly $4 billion. The company’s shares also climbed nearly 7% to $55.12. Additionally, shares of PayPal’s peer Block (SQ.N) increased by about 6%.
Currently, PYUSD’s market capitalization is approximately $159 million, and it has a daily trading volume of almost $2.4 million, according to Coinstats.
PayPal said it was cooperating with the regulator’s request for the documentation about its USD stablecoin.
The firm’s new CEO, Alex Chriss, stated the company would align its resources to its “most profitable growth priorities.”
Significance of SEC Actions
The SEC’s subpoena indicates that the regulator has no intention of loosening its grip on the cryptocurrency industry. While most of the companies targeted by the watchdog are crypto-native, PayPal marked the first major U.S. financial institution in its scrutiny list.
The regulator has sued several crypto companies in the country including its ongoing lawsuit against Coinbase exchange. In August, the SEC lost a high-profile court case against digital asset manager Grayscale Investments.
In October, the watchdog finally moved to dismiss its three-year lawsuit against Ripple, the company behind the XRP, one of the largest cryptocurrencies by market cap.
The SEC latest action against PayPal is further evidence showing that the U.S. is a difficult environment for crypto companies.
