PayPal’s Popular Stablecoin Earns its First Regulatory Red Flag

Share This Post

PayPal has enjoyed massive success in recent years transitioning into a digital payments powerhouse. However, the company’s foray into the cryptocurrency world has now caught the attention of regulators.

A Groundbreaking Stablecoin Launch

In August of this year, PayPal made headlines when it launched PYUSD, its USD-backed stablecoin. This marked the first time a major financial institution had embraced digital currencies at such a scale, paving the way for their integration into mainstream commerce.

PayPal partnered with cryptocurrency heavyweight Paxos to issue PYUSD, ensuring the coin would be fully collateralized by reserves of real USD dollars and liquid assets. This instilled confidence that each PYUSD token could be redeemed 1:1 for a greenback.

The launch was a resounding success. PYUSD rapidly listed on leading exchanges like Coinbase and, pouring fuel on its adoption fire. Within just two short months, PYUSD’s market cap ballooned to $150 million – no small feat for a new stablecoin.

Gaining SEC’s Unwanted Attention

PayPal's popular Stablecoin

All seemed well for PayPal’s experiment until November 1st, when the other shoe suddenly dropped. In a quarterly filing, PayPal disclosed it had received an ominous subpoena from none other than the SEC regarding PYUSD.

While subpoenas don’t automatically mean legal trouble, the SEC is known for its tough regulatory approach to the crypto industry. Like a baseball player fearing a visit to the principal’s office, PayPal now finds itself under the SEC’s microscope.

So what drew regulators’ ire? As the de facto central bank of crypto, the SEC takes a dim view of any asset it deems an unregistered security – and stablecoins are a favorite target. In the past, the SEC has claimed offerings like Binance’s BUSD fall under their purview.

By aggressively promoting PYUSD’s payments functionality without SEC approval, some experts argue PayPal may have overstepped. Despite being banking-compliant today, the SEC could retroactively rule PYUSD a past security. Only time will tell how their investigation unfolds.

Related Posts

Best Crypto Launchpool Platforms for Staking in 2024

Crypto launchpool platforms have become quite popular in recent...

Best Halal Cryptocurrencies for Islamic Investors in 2024

If you're a Muslim investor curious about cryptocurrencies but...

Best Crypto Launchpad Platforms for New Projects 2024

Crypto launchpad platforms are among the most exciting innovations...

Top Halal Crypto Platforms for Islamic Finance 2024

The search for halal crypto platforms lies at the...

Best Crypto Staking Platforms for Passive Income 2024

As the title suggests, crypto staking platforms are central...

Best Crypto Referral Programs for Earning Rewards in 2024

As the popularity of cryptocurrencies continues to surge, so...