PayPal (NASDAQ: PYPL) Announces the U.S. SEC has Closed Its Investigation into the Company’s USD-backed Stablecoin, PYUSD

The U.S. Securities and Exchange Commission (SEC) has closed its investigation into PayPal's (NASDAQ:PYPL) USD-backed stablecoin, PayPal USD (PYUSD), without taking any enforcement action, the payments provider announced on Monday.

The SEC’s Division of Enforcement notified PayPal in February that it had concluded its inquiry into PYUSD, which began in November 2023, the company disclosed in the Q1 2025 earnings report. The regulator had issued a subpoena requesting documents related to the stablecoin, and PayPal said it fully cooperated with the regulator’s request.

“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 company commented in the statement.

The news of the SEC’s decision comes as PayPal reported stronger-than-expected first-quarter financial results. The company posted earnings of $1.33 per share, surpassing the average estimate of $1.19, and revenue rose 1% year-over-year to $7.8 billion, edging past expectations of $7.7 billion.

Dropping the lawsuit against PYUSD is further evidence that the SEC, under its new leadership, is easing the pressure previously applied to crypto firms. A month ago, the regulator ended its probe into Crypto.com, and in February it closed its investigation into Robinhood Crypto. Earlier this year, the SEC wrapped up inquiries involving Coinbase (NASDAQ:COIN) and Gemini.

Will PYUSD Gain Traction?

PYUSD, which launched in August 2023, is advertised as being fully backed by U.S. dollar deposits, short-term Treasuries, and cash equivalents and can be redeemed 1:1 for U.S. dollars.

Despite these assurances, PYUSD has so far managed to capture only a small share of the stablecoin market, which is dominated by larger players such as Tether and Circle. As of late April, PYUSD's market capitalization stood at approximately $880 million, less than 1% of Tether's $148.5 billion.

However, recent months have seen a pickup in PYUSD's growth. Data from CoinGecko shows that the stablecoin's supply has increased by 75% since the start of 2025, although the coin's supply remains lower than its August 2024 peak.

Boosting Adoption

In an effort to boost adoption, PayPal recently introduced a new loyalty program that allows U.S. users to earn an annual yield of 3.7% for holding PYUSD on its platform. The company also announced a partnership with Coinbase aimed at expanding the stablecoin's use cases.

"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, PayPal President and CEO.

With the SEC inquiry now closed, PayPal is looking to expand PYUSD's presence in the digital asset market, leveraging new partnerships and product offerings to compete in a crowded stablecoin sector.