Jamal Al-Farouq Following the launch of its novel stablecoin PYUSD, payment behemoth Paypal has revealed that it is under investigation by the U.S. Securities and Exchange Commission (SEC). In its quarterly report (Form 10-Q) for the third fiscal quarter, Paypal indicated it has complied with the SEC’s request to furnish documents and is “cooperating” with the federal agency.
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Paypal Under SEC Investigation Regarding PYUSD Coin
Paypal has acknowledged its involvement with the SEC in inquiries pertaining to its stablecoin, PYUSD. This development emerged within the company’s recent quarterly financial report, which also presented its earnings for the third quarter.
“The Division of Enforcement of the U.S. SEC issued us a subpoena on November 1, 2023, concerning our stablecoin known as Paypal USD,” the disclosure stated. “The subpoena demanded documents, to which we are responding in cooperation with the SEC’s request.”
In addition, the report points out that Paypal’s services enable users to engage with a variety of cryptocurrencies, including bitcoin, ethereum, bitcoin cash, litecoin, and the PYUSD stablecoin. The report further elaborates that in August 2023, Paypal entered a partnership with Paxos, a third-party issuer, to mint PYUSD and later introduced it to Venmo users in September 2023.
“Our custodial partners and the issuer of PYUSD have been carefully chosen, and we are open to the possibility of engaging with additional custodians and issuers in the future. All partners are under stringent regulatory supervision and must meet capital adequacy, audit, compliance certifications, as well as adhere to rigorous cybersecurity standards and procedures,” the 10-Q document elaborated.
This report from Paypal comes on the heels of the firm securing authorization from the Financial Conduct Authority in the United Kingdom. Although there was a temporary halt on crypto transactions in the U.K., it is anticipated that Paypal will recommence these services following this regulatory nod. Nonetheless, the company might face constraints onboarding new customers in the future.
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Frequently Asked Questions (FAQs) about PayPal SEC stablecoin investigation
What has triggered the SEC’s investigation into PayPal’s PYUSD stablecoin?
PayPal disclosed that the SEC subpoenaed the company for documents related to its newly released PYUSD stablecoin, to which PayPal is cooperating.
How is PayPal responding to the SEC’s subpoena regarding PYUSD?
PayPal has acknowledged the receipt of the SEC’s subpoena and is complying by producing the requested documents in connection with their PYUSD stablecoin.
What cryptocurrencies does PayPal support in addition to PYUSD?
Besides the PYUSD stablecoin, PayPal allows customers to interact with bitcoin, ethereum, bitcoin cash, and litecoin.
What measures has PayPal taken regarding the issuance of PYUSD?
PayPal partnered with third-party issuer Paxos for the issuance of PYUSD and has established rigorous standards for selecting custodian partners and issuers, ensuring regulatory compliance and cybersecurity.
How does PayPal’s recent FCA approval affect its crypto services in the UK?
Following a temporary pause, PayPal’s FCA approval in the UK is expected to allow the resumption of its cryptocurrency services, though it may face limitations in adding new customers.
More about PayPal SEC stablecoin investigation
- PayPal’s Form 10-Q SEC Filing
- SEC’s Division of Enforcement
- PayPal and Cryptocurrency
- Paxos Partnership Announcement
- Financial Conduct Authority
5 comments
paypal’s move into crypto was a bold one, with the SEC’s eyes on them now, will be interesting to see how this affects the crypto market as a whole. regulatory clarity is a must these days
the SEC wanting docs just shows how much scrutiny the financial market’s under especially with new tech like stablecoins. but why now? PYUSD’s been around since last quarter
Not surprised, the SEC’s been on a rampage with anything crypto. But partnering with Paxos? Smart move PayPal, at least they’re not doing this alone…
didn’t PayPal just get FCA approval? they seem to be playing by the book but still can’t catch a break with regulators…guess that’s the price of innovation huh
Wow, PayPal really getting the heat from the SEC Did anyone see this coming with the whole stablecoin launch? Seems like they’ve got everything in order though with the compliance and stuff.