U.S. SEC Subpoenas PayPal Over USD Stablecoin, Stock Soars Despite Regulatory Scrutiny
Global payments giant PayPal has been served a subpoena by the U.S. Securities and Exchange Commission (SEC) regarding its U.S. dollar-pegged stablecoin, PayPal USD (PYUSD). The news was revealed in a recent filing, which states that the SEC’s Enforcement division sent the subpoena to PayPal on November 2nd.
The subpoena comes just three months after PayPal launched its PYUSD stablecoin in early August. Issued by Paxos Trust and backed by U.S. dollar deposits, short-term Treasurys, and similar cash equivalents, PYUSD is designed to facilitate digital payments and Web3 transactions. Based on the Ethereum blockchain, the stablecoin has gained significant traction since its launch.
Despite the regulatory scrutiny, PayPal’s stock surged by 6.5% following the company’s impressive 3Q earnings per share of $1.30, exceeding estimates of $1.23. Additionally, PayPal’s 3Q revenue reached $7.42 billion, slightly above expectations of $7.38 billion.
The SEC’s subpoena raises questions about the regulatory landscape for stablecoins, which have become increasingly popular in recent years due to their ability to provide a stable store of value and facilitate efficient transactions. While some lawmakers and regulators have expressed concerns about the potential risks associated with stablecoins, others see them as a promising innovation that can improve financial services and promote inclusion.
In response to the subpoena, PayPal released a statement assuring customers that it is cooperating fully with the SEC’s inquiry. “We are committed to working closely with regulators to ensure that our products and services comply with all applicable laws and regulations,” said a spokesperson for PayPal.
Paxos Trust, the issuer of the PYUSD stablecoin, also emphasized its commitment to regulatory compliance. “We take our responsibility to operate in accordance with applicable laws and regulations very seriously,” said a representative for Paxos. “We will continue to work closely with the SEC and other relevant authorities to ensure that our stablecoin offerings meet the highest standards.”
While the SEC’s subpoena may raise concerns among investors and industry participants, it is important to note that it is not uncommon for regulators to issue subpoenas as part of their oversight responsibilities. Moreover, PayPal’s strong earnings suggest that the company remains well-positioned to navigate any regulatory challenges that may arise.
As the use cases for stablecoins continue to expand, regulatory clarity will be crucial in fostering innovation while protecting consumers and maintaining financial stability. With players like PayPal and Paxos leading the charge, the future of stablecoins looks bright despite the current regulatory uncertainty.
