PayPal Faces Regulatory Scrutiny as SEC Subpoenas PYUSD Stablecoin
The United States Securities and Exchange Commission (SEC) has issued a subpoena to global payment giant, PayPal over its newly launched stablecoin, PYUSD.
On Nov 2, PayPal Holdings announced that it received a subpoena from the enforcement arm of the SEC tied to its U.S. dollar stablecoin according to a Reuters report.
The company launched PYUSD in August becoming the first major traditional finance firm to float a stablecoin with promises to offer new use-cases and projections to compete in the competitive market.
“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,” a section of the firm’s quarterly earnings read.
Although the nature of the subpoena and documents requested remains unclear, many crypto users have drawn inferences from the SEC’s hard stance on the market in recent months while others view it as a move to ensure regulatory compliance.
PayPal’s growth so far
PayPal’s stablecoin may face regulatory headwinds if the SEC’s new move is borne out of a rule breach alongside tough competition from other market participants
Soon after its rollout, it was listed by major digital asset exchanges including Coinbase and Kraken while being hailed as a significant entrant amid talks of renewed institutional appetite sparked by several applications for a spot Bitcoin (BTC) ETF.
Despite the high anticipation from a larger portion of users, not all experts predicted skyrocketing figures for stablecoin due to the present crypto winter and the fact that stablecoins differ from other assets in terms of utility.
The Bank of America noted after the launch of PYUSD that the stablecoin will face fierce competition in the markets and is unlikely to become a favorite in the near term.
💭 Bank of America Says PayPal’s Stablecoin Will Not Record Significant Adoption In The Coming Months
— Cryptonews.com (@cryptonews) August 12, 2023
Analysts at the bank also stressed that contrary to popular opinion, the launch will not draw proper crypto regulations for the United States market because it does not, “does not alter systemic risk for traditional markets.”
On the other hand, Bernstein projects the stablecoin market to hit $3 trillion in the next five years, a market share in which PYUSD is expected to score huge points.
The market capitalization of PYUSD is now over $150 million, described as a successful two months by its issuer, Paxos Trust. Per CoinGecko data, its average daily volume is $2.69 million with a $158 million valuation.
Away from the US market, PayPal obtained a license from the Financial Conduct Authority (FCA) to offer crypto-related services in the country amid its desire to become a fully compliant entity to crypto rules.