PayPal PYUSD Stablecoin Is Noted By The SEC With Doubt From The Community

Key Points:

• PayPal is under SEC investigation for its stablecoin, PYUSD, but is cooperating.
• PayPal PYUSD stablecoin criticized for using older technology and high transaction fees on Ethereum.
• The company’s market value increases as it aims to become more efficient and offers a positive profit forecast.

PayPal Holdings Inc., is currently facing scrutiny from the United States Securities and Exchange Commission (SEC) regarding its dollar-linked stablecoin, PYUSD.

SEC Investigates PayPal PYUSD Stablecoin Project

The SEC’s Division of Enforcement issued a subpoena on November 1, 2023, requesting documents related to the project. PayPal has stated that it is fully cooperating with the SEC’s request.

PayPal PYUSD stablecoin launched in August is pegged to the US dollar and is backed by US dollar deposits, short-term Treasury bonds, and similar cash equivalents. This development comes as the company seeks to enhance its offerings in the cryptocurrency market through a partnership with crypto firm Paxos.

It’s worth noting that SEC subpoenas are typically used for information gathering and may not necessarily lead to legal actions or enforcement measures. The SEC will determine its course of action based on the information it collects.

Although PayPal PYUSD stablecoin has garnered attention in the crypto community, it has faced criticism for its perceived lack of unique features and utilization of older technology with design flaws, including being built on the Ethereum blockchain, known for its high transaction fees.

PayPal’s Market Value Soars Amid Regulatory Scrutiny

Despite the SEC’s investigation, PayPal’s market value has continued to rise. According to Reuters, the company added nearly $4 billion to its market capitalization, with shares climbing nearly 7% to $55.12. This increase is attributed to investors’ enthusiasm following PayPal’s commitment to becoming a “leaner” organization, as well as a positive full-year profit forecast.

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