PayPal's New Stablecoin Platform Raises Compliance Questions
PayPal and its partners MoonPay and M0 have launched a new platform called PYUSDx, which allows businesses to issue their own branded stablecoins without maintaining reserves or custody infrastructure. The three companies that initially used this platform are Saturn, Concrete, and Cap, with over $100 million in combined processed volume.
The $PYUSD token is issued by Paxos, a federally regulated national banking association, and is backed by dollar deposits and Treasuries. However, the PYUSDx tokens issued by MoonPay have a reserve asset of $PYUSD itself, which raises questions about compliance with the $GENIUS Act.
The statute restricts the issuance of payment stablecoins to permitted issuers across four routes and requires reserves backing outstanding tokens one-to-one in specified high-quality liquid assets. PYUSDx tokens do not meet this requirement since their reserve asset is another token, not a listed asset class.