The world of cryptocurrencies received a new layer of intrigue this week, with PayPal being the latest entity to feel the heat of the SEC’s regulatory eye.
The payments giant has revealed a subpoena from the United States Securities and Exchange Commission (SEC), which is keeping an eye on its latest venture in the cryptocurrency space, stablecoin PYUSD, a digital asset designed to offer the stability of the US dollar in the turbulent sea of virtual currencies.
The news comes at a fascinating time for the sector with a likely approval of the Bitcoin ETF Spot in January 2024 in the United States. Now with a market capitalization already exceeding US$156 million, PayPal’s PYUSD is a relevant player on the cryptocurrency stage. This ERC-20 token, issued on the robust Ethereum blockchain, aims to bridge fiat and digital currencies, simplifying transactions for consumers and merchants with the PayPal seal of trust.
However, PayPal’s entry into the crypto market is not without its challenges. The company, which made history by enabling crypto payments and transfers, now faces a regulatory environment that is tightening around the world. In the United Kingdom, for example, even after obtaining registration with the Financial Conduct Authority (FCA), the company had its crypto wings slightly clipped, with restrictions on allowing the purchase of new digital assets by new customers and other operational limitations.
This narrative of regulatory caution is mirrored in various corners of the globe. Towards the end of October, the UK Treasury proposed a firmer inclusion of cryptocurrency-related activities under the umbrella of financial services regulation, signaling a step towards greater control of the sector.
The SEC seeks transparency and regulatory compliance. Paxos Trust Company, responsible for overseeing the issuance of PayPal USD, has already waved the flag of transparency, pledging to release a monthly reserve report for PYUSD starting in September 2023, which should shed light on the assets reserves that support the stablecoin.
The views and opinions expressed by the author, or anyone mentioned in this article, are for informational purposes only and do not constitute financial, investment or other advice. Investing in or trading cryptocurrencies carries a risk of financial loss.