PayPal is adjusting its protection policies for Non-Fungible Token (NFT) transactions, signaling a significant departure from its previous stance on supporting such digital assets. Effective May 20, 2024, PayPal's Seller Protection Program will no longer cover NFT transactions valued at $10,000 or above, as per the updated terms and conditions unveiled on March 21, 2024. This alteration means that NFT purchases exceeding the specified threshold will not be safeguarded against false claims, chargebacks, or other fraudulent activities that could pose financial risks to sellers. Furthermore, PayPal will cease to extend buyer protection for NFT transactions, reflecting a tightening of its policies concerning the burgeoning NFT market.
Despite its increasing involvement with blockchain technology and digital assets, exemplified by the introduction of cryptocurrency support in 2022 and a patent application for an NFT purchase and transfer system, PayPal's recent policy amendments indicate a more cautious approach to NFT transactions. The revisions come amidst broader regulatory scrutiny, as evidenced by PayPal's acknowledgment of receiving a subpoena from the U.S. Securities and Exchange Commission (SEC) in November 2023 regarding its U.S. dollar-tied stablecoin, PYUSD. The subpoena, detailed in PayPal's 10-Q report, underscores the company's compliance efforts as it cooperates with the SEC's inquiry.
