SEC Goes After PayPal With Subpoena on Its PYUSD Stablecoin

Payment processing company PayPal has received a subpoena from the U.S. Securities and Exchange Commission (SEC) in relation to its newly launched PYUSD stablecoin.

The United States Securities and Exchange Commission (SEC) has issued a subpoena to popular payment company PayPal, executives confirmed on Wednesday. The subpoena is related to the company’s PYUSD stablecoin, which launched in August 2023.

PayPal executives disclosed news of the subpoena in a post-earnings call, adding that the company is now collaborating with the regulator on the matter. An SEC subpoena is a formal request by the regulator seeking documents and other information relevant to a case that the agency is investigating.

Receiving a subpoena is considered early evidence that the SEC believes an entity has violated securities law. In PayPal’s case, the SEC may be seeking a basis to establish that PYUSD or its issuance method does not comply with its regulations.

It is also noteworthy that an SEC subpoena does not necessarily mean that a company will face a lawsuit from the agency. Instead, such notice may lead to further discussions between the company and the agency, confirming that there were no violations.

SEC Doubles Down on Crypto Enforcement Against the Odds

PayPal receiving a subpoena on its stablecoin follows a pattern of relentless enforcement actions against crypto-related firms by the SEC. The regulatory body has filed lawsuits against even the most prominent crypto companies, including Coinbase, Binance, Ripple, and Grayscale.

Notably, the regulator has also suffered a few landmark losses against Ripple and Grayscale. The United States Government Accountability Office (GAO) also recently called out the SEC for breaking the law with a rule it hastily issued about crypto custodians.

However, a potential lawsuit against an established payment company like PayPal would still catch the eye. For one thing, it would mark the first time the SEC cracked down on a mainstream company for integrated core blockchain-based products. Such a development would also discourage the adoption of crypto-related technology by other mainstream companies.

Meanwhile, it is worth recalling that a similar move by the SEC against stablecoin issuer Paxos led to the demise of the Binance USD (BUSD) token. PayPal will evidently hope to avoid a similar outcome, especially with its stablecoin project already gaining traction.

Recall that as reported by The Crypto Basic Paypal launched Crypto services back in 2021. In the lastest move, PayPal registered for cryptoasset activities in the UK as part of its post-Brexit expansion.