Payments giant PayPal says that it has received a subpoena from the U.S. Securities and Exchange Commission (SEC) over its new stablecoin.
In a new document, PayPal says that the regulatory agency has issued a subpoena over PYUSD, the firm’s dollar-backed stablecoin which launched earlier this year.
“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 goes on to say that due to the regulatory uncertainty surrounding stablecoins, they and PYUSD issuers may face substantial costs to “operationalize and comply” and reputational harm if PYUSD is ever deemed a security.
“The regulatory treatment of stablecoins is evolving and has drawn significant attention from legislative and regulatory bodies around the world, including the SEC. There are uncertainties on how ongoing changes to federal, state, and international laws and regulations would apply to stablecoins in practice, and we and the PYUSD Issuer may face substantial costs to operationalize and comply with any additional or changed requirement.
If we or the PYUSD Issuer fail to comply with regulations, requirements, prohibitions or other obligations applicable to us, we could face regulatory or other enforcement actions, potential fines, and other consequences. In addition, we could face reputational harm through our relationship with the PYUSD issuer if the PYUSD issuer were to face regulatory scrutiny or if PYUSD is deemed to be a security.”
PYUSD, built on the leading smart contract platform Ethereum (ETH), was launched in August as a means of improving payments on PayPal.
At the time, PayPal said the new stablecoin allowed users to buy and sell PYUSD through the PayPal app, convert it to other digital assets such as Bitcoin (BTC), and pay for goods and services, streamlining payments.
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