- The U.S. Securities and Exchange Commission (SEC) concluded its investigation into PayPal’s stablecoin, PYUSD, in February
- The company revealed that the agency halted its investigation without recommending any enforcement action
- PayPal received a subpoena from the SEC in November 2023 and fully cooperated with the inquiry
The U.S. Securities and Exchange Commission (SEC) ended its probe into PayPal’s USD-backed stablecoin, PYUSD, in February, the company has revealed. Initiated in November 2023, the investigation involved a subpoena for documents related to PYUSD, but the agency decided three months ago that the stablecoin contravened no rules. The SEC’s decision to close the case reflects a broader shift in the regulatory landscape concerning digital assets and adds PYUSD to the growing list of enforcement actions that the agency has either halted or decided not to start.
PYUSD in the Clear for Three Months
PayPal broke the news that the SEC has dropped its investigation into PYUSD in its first-quarter earnings report:
In November 2023, we received a subpoena from the U.S. SEC Division of Enforcement relating to PayPal USD stablecoin. The subpoena requested the production of documents. In February 2025, the SEC communicated it was closing this inquiry without enforcement action.
The closure of the investigation comes amid a broader trend of the SEC easing its regulatory stance on cryptocurrency-related entities. Earlier this year, the SEC concluded investigations into companies like Crypto.com, Robinhood Crypto, Coinbase, and Gemini without enforcement actions, indicating a more measured approach by the SEC under its new leadership, focusing on collaboration rather than litigation.
PayPal Looks to Expand
PYUSD, launched in August 2023, is a stablecoin fully backed by U.S. dollar deposits, short-term Treasuries, and cash equivalents, designed to be redeemable 1:1 for U.S. dollars. Despite its strong backing and integration into PayPal’s ecosystem, including platforms like Venmo, PYUSD has faced challenges gaining significant market share in a space dominated by competitors like Tether (USDT) and Circle (USDC). As of late April 2025, PYUSD’s market capitalization stood at approximately $880 million.
With the SEC no longer dogging it, PayPal aims to expand PYUSD’s presence in the digital asset market, announcing partnerships, such as with Coinbase in order to enhance the stablecoin’s accessibility and utility. Additionally, PayPal introduced a rewards program offering U.S. users a 3.7% annual return for holding PYUSD in their accounts, aiming to incentivize adoption and usage.
The SEC’s decision to close the investigation without enforcement action provides regulatory clarity for PayPal and sets a precedent for other companies operating in the stablecoin space. It also reflects the evolving regulatory environment in the U.S., where agencies are seeking to balance oversight with innovation in the rapidly growing digital asset sector.
