PayPal has recently gone under the scrutiny of the United States Securities and Exchange Commission (SEC) as the Enforcement division issued a subpoena related to its US dollar-pegged stablecoin. The revelation of the SEC's action came to light on November 2, according to a report by Reuters.
SEC Inquiry Follows PayPal's PYUSD Stablecoin Launch
This development occurs approximately three months after PayPal introduced its own US dollar-denominated stablecoin (PYUSD) in early August. PYUSD is issued by Paxos Trust and is backed by a reserve of US dollar deposits, short-term Treasurys, and similar cash equivalents. Operating on the Ethereum blockchain, PYUSD has been designed with the intention of facilitating digital payments and contributing to the Web3 ecosystem.
The exact nature and focus of the SEC's inquiry remain undisclosed. However, regulatory authorities have been scrutinizing stablecoins and their operations in the United States, emphasizing the need for compliance with existing financial regulations.
PayPal discloses SEC subpoena tied to stablecoin https://t.co/mrSvn8bgz8 pic.twitter.com/9jiLSqxNZq
— Reuters (@Reuters) November 2, 2023
PayPal and Paxos Launch PYUSD: The Digital Dollar
Back in August, Finance Magnates reported that PayPal had unveiled PYUSD, in a joint effort with stablecoin issuer Paxos Trust Company. This digital asset is fully backed by US dollar deposits, short-term US Treasuries, and similar cash equivalents, with a 1:1 redemption ratio for US dollars.
Users can transfer PYUSD between PayPal and compatible digital wallets, making it suitable for peer-to-peer transactions and purchases. Furthermore, PayPal USD users have the flexibility to convert various cryptocurrencies supported on the platform into PYUSD.
Dan Schulman, the President and CEO of PayPal, praised the new offering, emphasizing its role as a stable instrument connecting digital currencies to fiat, particularly the US dollar. PYUSD operates as an ERC-20 token on the Ethereum blockchain, serving consumers, merchants, and developers as a bridge between traditional and digital currencies. The company expects it to gain traction among developers and integrate with wallets and Web 3 applications.
In a bid for transparency, Paxos plans to issue monthly reports detailing the financial instruments backing PYUSD, including a third-party confirmation of their value. This move aligns with growing industry demands for cryptocurrency exchanges to disclose the financial reserves supporting their stablecoins, as seen with 'proof of reserves' initiatives by exchanges like Binance.
PYUSD will be available on Venmo, a mobile payments app acquired by PayPal in 2013. This stablecoin opens up possibilities for PayPal users to engage in digital asset trading, including Bitcoin, Bitcoin Cash, Ethereum, and Litecoin.
This article was written by Tareq Sikder at www.financemagnates.com.
You can get bonuses upto $100 FREE BONUS when you:
💰 Install these recommended apps:
💲 SocialGood - 100% Crypto Back on Everyday Shopping
💲 xPortal - The DeFi For The Next Billion
💲 CryptoTab Browser - Lightweight, fast, and ready to mine!
💰 Register on these recommended exchanges:
🟡 Binance🟡 Bitfinex🟡 Bitmart🟡 Bittrex🟡 Bitget
🟡 CoinEx🟡 Crypto.com🟡 Gate.io🟡 Huobi🟡 Kucoin.
Comments