Payments giant PayPal says it has received a subpoena from the US Securities and Exchange Commission (SEC) over its new stablecoin.
In a new document, PayPal says its regulator has issued a subpoena over PYUSD, the company’s dollar-backed stablecoin that launched earlier this year.
“On November 1, 2023, we received a subpoena from the US SEC Division of Enforcement regarding the PayPal USD stablecoin. The subpoena requests production of documents. We are cooperating with the SEC in connection with this request.”
PayPal goes on to say that due to regulatory uncertainty surrounding stablecoins, they and PYUSD issuers could face significant costs to “operationalize and comply” and reputational damage if PYUSD is ever considered a security.
“The regulatory treatment of stablecoins is evolving and has attracted significant attention from legislative and regulatory bodies around the world, including the SEC. There are uncertainties as to how ongoing changes in federal, state, and international laws and regulations would practically apply to stablecoins, and we and the PYUSD issuer may incur significant costs to implement any additional or modified requirements and to live up to.
If we or the PYUSD issuer fail to comply with regulations, requirements, prohibitions or other obligations applicable to us, we may be subject to regulatory or other enforcement actions, possible fines and other consequences. In addition, we may face reputational harm as a result of our relationship with the PYUSD issuer if the PYUSD issuer faces regulatory scrutiny or if PYUSD is deemed a security.”
PYUSD, built on the leading smart contract platform Ethereum (ETH), launched in August as a way to improve PayPal payments.
At the time, PayPal said the new stablecoin would allow users to buy and sell PYUSD through the PayPal app, convert it into other digital assets such as Bitcoin (BTC) and pay for goods and services, streamlining payments.
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