PayPal Subpoenaed by SEC Over Stablecoin: Latest News & Hot Takes

PayPal received a subpoena from the US Securities and Exchange Commission requesting documentation on its PYUSD stablecoin, the payments giant said in a filing to the SEC.

From PayPal’s SEC filing

“On November 1, 2023, we received a subpoena from the U.S. SEC Division of Enforcement relating to PayPal USD stablecoin. The subpoena requests the production of documents. We are cooperating with the SEC in connection with this request.”

Context

PayPal launched dollar-pegged PYUSD in August. The coin is fully backed by US dollar deposits and other highly liquid assets. PYUSD can be used to buy, sell, hold and transfer on PayPal and Vemo, buy crypto offered on PayPal, and it can also be sent to compatible Ethereum addresses, according to PayPal’s website.

Market

The coin has a market capitalization of about $158M and was trading at $1, Thursday at 11am EST, according to CoinGecko data. That compares with USDT, the largest stablecoin, which has a market cap of $84B.

Top News Stories

PayPal Receives SEC Subpoena Focused on Stablecoin Work: Bloomberg

Regulators’ concerns over stablecoins
“For years, US regulators have been scrutinizing stablecoins. Their concerns are twofold: They worry that if a stablecoin crashes, it could trigger fire sales of other assets as their backers try to maintain a peg. They also fear that if stablecoins prove their worth, they could undermine the power of central banks and more easily enable criminals to engage in money laundering.”

PayPal Faces SEC Subpoena Over Its PYUSD Stablecoin: CoinDesk

Why a stablecoin coming from a tech giant is an issue
“The fear from some U.S. regulators is that a token tied to a major tech platform could expand quickly to wide usage and present a threat to U.S. financial stability.”

Circle’s take on stablecoin regulation
“In September, stablecoin issuer Circle intervened in the SEC’s case against Binance, arguing that financial trading laws shouldn’t apply to stablecoins, whose value is tied to other assets.”

PayPal faces SEC action related to PYUSD stablecoin: Official: Cointelegraph

Impact of regulation on stablecoin growth
“In April 2023, Circle CEO Jeremy Allaire argued that a cryptocurrency crackdown by U.S. regulators had been a significant factor behind the declining market capitalization of Circle’s USD Coin”

CT Hot Takes

“If PYUSD is a security, so are Starbucks gift cards, prepaid debit cards, and airline reward points. This thing fails Howey so spectacularly it would be laughed out of court by a judge. It’s also safer for consumers than standard PayPal e-money because it’s bankruptcy remote. This is strictly better in all ways.

And yet, in a target rich environment, the SEC continues to avoid going after anyone actually doing wrong and instead continue to target legitimate companies helping consumers in a way that is guaranteed to damage American security interests and push the space offshore in a way that makes it more viable for terrorists and criminals to use crypto because we slowly lose the tools to interdict them.

Put differently: if Gary Gensler has been bribed by crypto scammers, organized crime, and Hamas, and was trying to help them while not tipping his hand, what would he be doing differently?”

said Austin Campbell @CampbellJAustin

“Ultimately, Gary’s constant crusades will end with courts limiting the SEC’s power by narrowly interpreting the various securities acts that authorize its power. Gary Gensler, the man who killed the SEC.”

said exlawyer.eth/tez @exlawyernft

“The SEC subpoenaing PayPal about a dollar backed stablecoin that has stronger guarantees than the digital dollars Paypal’s been using for 20 years.

If it’s a token Gary thinks it’s his.

Someone get this unelected tyrant out of office.”

said RYAN SΞAN ADAMS – rsa.eth