PYUSD Gets A Pass: SEC Ends PayPal Stablecoin Review Without Action

SEC Ends Investigation Into PayPal USD Stablecoin, No Action Taken

PayPal's USD-backed stablecoin, PayPal USD (PYUSD), has officially cleared regulatory scrutiny from the U.S. Securities and Exchange Commission (SEC), following a formal investigation initiated in late 2023.

The payments giant disclosed in its Q1 2025 earnings report that the SEC had concluded its inquiry without taking any enforcement action against the company.

The investigation, which began with the SEC issuing a subpoena in November 2023, sought documents related to the stablecoin.

In a statement, PayPal confirmed its full cooperation with the SEC’s requests.

The company said in the report,

"In February 2025, the SEC communicated it was closing this inquiry without enforcement action."

This concludes the months of uncertainty surrounding its crypto product.

What Does This Mean For PayPal’s Crypto Ambitions?

PayPal's ability to move forward without facing penalties from the SEC comes as a significant relief, especially as the firm continues to expand its cryptocurrency offerings.

The launch of PYUSD in August 2023 marked PayPal’s bold step into the crypto space, positioning itself as the first major U.S. fintech firm to issue its own stablecoin.

The stablecoin, which is pegged 1:1 to the U.S. dollar, is designed to be used within PayPal's ecosystem for digital payments, remittances, and online transactions, including on platforms like Venmo.

However, the SEC had expressed concerns, as the stablecoin was issued in partnership with Paxos Trust Company, an entity under its watch.

Despite these regulatory challenges, PayPal has shown a willingness to cooperate with the authorities.

PayPal’s Stablecoin Strategy: Slow Growth, But Rising Interest

Although PYUSD has yet to make significant inroads into the broader stablecoin market, which is dominated by Tether and Circle, it has seen some growth in recent months.

As of April 2025, PYUSD’s market cap stood at near $880 million, a small fraction of Tether’s $148.5 billion, but the stablecoin’s circulating supply rose 75% since the start of the year.

Source: CoinMarketCap

To encourage adoption, PayPal recently launched a loyalty program for U.S. users, offering a 3.7% annual yield for holding PYUSD on its platform.

Additionally, a partnership with Coinbase aims to enhance the utility and appeal of PYUSD across global payment networks.

Alex Chriss, PayPal President and CEO, said,

“We are excited to drive new, exciting, and innovative use cases together with Coinbase and the entire cryptocurrency community, putting PYUSD at the center.”

PayPal’s Earnings Reflect Strength Amid Regulatory Uncertainty

Alongside the positive news about its stablecoin, PayPal also reported a strong first quarter for 2025.

The company’s earnings surpassed Wall Street expectations, posting a profit of $1.33 per share and a 1% increase in revenue year-over-year to $7.8 billion.

Despite the ongoing regulatory challenges around crypto, PayPal's broader business performance remains resilient.

While PayPal's venture into crypto assets, including the launch of PYUSD, has been a subject of intense regulatory scrutiny, the company remains focused on further expanding its offerings.

Jose Fernandez da Ponte, PayPal’s Senior VP and General Manager of blockchain, crypto, and digital currencies, said,

“Stablecoins can change the expense profile of payments. But we know that’s a long-term journey.”

With the SEC’s investigation now concluded, PayPal is positioned to grow its stablecoin's footprint, leveraging new product innovations and partnerships.

This decision signals a potential shift in regulatory sentiment, especially under the leadership of Gary Gensler’s SEC, which has recently shown signs of easing its approach towards crypto firms.

Is PayPal Set To Challenge Stablecoin Leaders?

Despite PYUSD’s slow start, PayPal's focus on driving adoption through new features, such as the recent yield program and transaction fee waivers on Coinbase, suggests that the company is intent on becoming a serious player in the digital asset space.

However, it is uncertain whether the stablecoin can compete with dominant market players like Tether and Circle, or whether it will carve out its own niche within PayPal's extensive ecosystem.

With the SEC investigation now behind it, PayPal seems determined to push ahead with its crypto ambitions, potentially offering new ways for users to engage with digital payments and further integrate stablecoins into everyday transactions.