Payment giant PayPal has been served with a subpoena by the United States Securities and Exchange Commission (SEC) concerning its U.S. dollar-pegged stablecoin, according to the firm’s official disclosure in its Q3 financial report filed with the SEC on November 2.
The SEC’s Enforcement division issued the subpoena to PayPal on November 1, requesting specific documents.
PayPal stated that it is fully cooperating with the SEC’s request.
This development comes approximately three months after PayPal introduced its PYUSD stablecoin in early August.
PYUSD is backed by U.S. dollar deposits, short-term Treasurys, and similar cash equivalents, with Paxos Trust acting as its issuer. The stablecoin operates on the Ethereum blockchain and is designed for digital payments and Web3 applications.
Paxos, the issuer, reported that PYUSD has enjoyed a successful launch, achieving a market capitalization of $150 million within two months of its introduction.
As of now, the market capitalization of PYUSD stands at approximately $159 million, with a daily trading volume of nearly $2.7 million, as reported by CoinGecko.
PayPal has not yet responded to requests for comment from Cointelegraph.
The rapid adoption of PayPal USD was driven in part by its listing on major exchanges such as Coinbase, Crypto.com, Bitstamp, and Kraken shortly after its launch.
In September, PayPal announced plans to integrate PYUSD into its Venmo mobile payment service, allowing users to buy and send PYUSD to friends and family.
PayPal has been actively expanding its crypto-related initiatives not only in the United States but also internationally.
In late October, it received a license from the United Kingdom Financial Conduct Authority, allowing it to offer crypto services in the UK.
This recent action by the SEC against PayPal further highlights the challenging regulatory environment for crypto companies in the United States.
The SEC has initiated lawsuits against several prominent domestic crypto firms, including its ongoing lawsuit against Coinbase.
In a notable development in October 2023, the SEC moved to dismiss its three-year lawsuit against Ripple, the company behind the XRP token, one of the largest cryptocurrencies by market capitalization.
In April 2023, Circle CEO Jeremy Allaire attributed the declining market capitalization of Circle’s USD Coin stablecoin to increased regulatory scrutiny and a crackdown on cryptocurrencies by U.S. regulators.