SEC Drops Investigation Into PayPal’s USD Stablecoin PYUSD

In a significant regulatory development, PayPal has announced that the U.S. Securities and Exchange Commission (SEC) has officially concluded its investigation into the company’s U.S. dollar-backed stablecoin, PayPal USD (PYUSD), without pursuing any enforcement action. The news, disclosed in a regulatory filing on April 29, signals a positive turn for PayPal’s stablecoin ambitions amid a challenging and highly scrutinized digital asset landscape.

According to the filing, the SEC first initiated its inquiry in November 2023 when PayPal received a subpoena from the agency’s Division of Enforcement requesting documentation related to the launch and operation of PYUSD. At the time, PayPal said it was cooperating fully with the SEC’s request. However, the company has now confirmed that the SEC sent notice in February 2025 that the inquiry had been closed without further action.

This development removes a significant regulatory cloud hanging over PayPal’s stablecoin initiative and may pave the way for greater innovation and broader adoption of PYUSD in the digital payments space.

Launched in August 2023, PYUSD is fully backed by U.S. dollar deposits, short-term Treasury securities, and similar cash equivalents. It is also redeemable 1:1 for U.S. dollars, offering users a familiar fiat-based digital currency option in an increasingly decentralized financial ecosystem.

Despite its backing by one of the world’s largest payments companies, PYUSD has faced stiff competition from stablecoin giants such as Tether (USDT) and Circle’s USD Coin (USDC). As of April 2025, PYUSD’s total market capitalization sits at approximately $880 million — a fraction of Tether’s $148.5 billion dominance. Nevertheless, the stablecoin has shown strong growth in recent months, with its circulating supply increasing by 75% since the start of 2025, according to CoinGecko. That growth, however, still trails the peak supply of over $1 billion reached shortly after launch in August 2024.

To accelerate adoption and usage, PayPal recently rolled out new initiatives aimed at boosting the appeal of PYUSD. On April 23, the company announced a new loyalty program that will allow U.S. users to earn an annual yield of 3.7% simply for holding PYUSD on the platform — a move designed to incentivize savings in digital dollars.

The day after that announcement, on April 24, PayPal also revealed a strategic partnership with Coinbase aimed at expanding the reach of PYUSD across the crypto ecosystem. “We are excited to drive new, exciting, and innovative use cases together with Coinbase and the entire cryptocurrency community, putting PYUSD at the center,” said Alex Chriss, President and CEO of PayPal.

These developments came on the heels of a strong first-quarter earnings report, which saw the company beat analyst expectations. PayPal reported earnings of $1.33 per share, well above the $1.16 expected by Wall Street. Revenue rose 1% year-over-year to reach $7.8 billion, and the firm also completed significant share repurchase activity during the quarter, demonstrating continued financial strength and shareholder confidence.

With regulatory uncertainty easing and growth strategies now in motion, PayPal appears well-positioned to reinvigorate its stablecoin ambitions and further entrench PYUSD as a serious contender in the evolving digital payments space.