PayPal's PYUSD Stablecoin Investigated by the SEC, But No Enforcement Action Is Being Sought

PayPal (NASDAQ: PYPL) has been investigated by the U.S. Securities and Exchange Commission (SEC).

The U.S. Securities and Exchange Commission (SEC) probe into PayPal's (NASDAQ:PYPL) U.S. dollar-backed stablecoin, PYUSD, has closed without any charges being filed, as disclosed by the company in a recent filing.

The investigation, which began in November 2023 with a subpoena demanding documents about the development and management of PYUSD, has now come to an end, paving the way for broader adoption of the stablecoin.

"The staff of the Enforcement Division of the U.S. Securities and Exchange Commission has formally closed its inquiry into the company's stablecoin, PYUSD, without any further action being sought," PayPal said in the filing on April 29.

The SEC's interest in PYUSD was part of a broader inquiry into the cryptocurrency sector, which has seen increased scrutiny from regulators in recent years. However, under its new leadership, the SEC seems to be reducing enforcement pressure on crypto firms.

In a sign of a changing regulatory attitude following years of heightened scrutiny, the agency has also closed investigations into Crypto.com, Robinhood Crypto, Coinbase (NASDAQ:COIN), and Gemini in recent months.

"We are cooperating fully with the authorities in response to the request from the SEC for information related to the company's stablecoin, PYUSD," PayPal had said in February 2024.

At the time, the company noted that it had not been notified of any pending legal action by the agency.

The stablecoin, which launched in August, is currently ranked sixth among stablecoins with a market capitalization of nearly $880 million, according to CoinMarketCap. In comparison, Tether (USDT) and Circle's USD Coin (USDC) control the majority of the market, with Tether alone exceeding $148 billion in market cap.

PYUSD, which is redeemable 1:1 for U.S. dollars and said to be fully backed by a combination of U.S. dollar deposits, short-term U.S. Treasuries, and cash equivalents, has similar characteristics to major competitors. However, it has faced a slower uptake among users.

Still, 2025 has seen positive momentum for the stablecoin. According to CoinGecko, the circulating supply of PYUSD has increased by 75% since January 1, signaling renewed interest in the asset. However, that figure remains 14% lower than its peak in August 2024, when supply briefly crossed the $1 billion mark.

To encourage usage and generate interest in PYUSD, PayPal announced a loyalty reward program, offering a 3.7% annual yield to U.S. users who hold PYUSD in their accounts. This initiative, unveiled on April 23, aims to position PYUSD not just as a transactional stablecoin but also as a passive income tool.

One day later, on April 24, PayPal revealed a strategic alliance with Coinbase, one of the largest U.S. bitcoin exchanges. The partnership aims to expand PYUSD's use cases and integrate the asset into Coinbase's infrastructure.

"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.

Strong Q1 2025 earnings coincided with the conclusion of the SEC probe. Reporting profits of $1.33 per share, PayPal largely surpassed analyst projections of $1.16. The company also reported sales of $7.8 billion, marking a 1% increase year-over-year.

Besides strong financials, PayPal highlighted substantial share buyback activity, thereby demonstrating confidence in its long-term expansion plans.

The coming months will be crucial in determining whether PYUSD can build on recent gains and transform from a fringe stablecoin to a serious contender. While the SEC's decision removes a major hurdle, user trust, utility, and platform adoption will ultimately decide PYUSD's future.

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The U.S. Securities and Exchange Commission (SEC) probe into PayPal's (NASDAQ:PYPL) U.S. dollar-backed stablecoin, PYUSD, has closed without any charges being filed, the company disclosed in a regulatory filing on Friday.

The investigation, which began in November 2023 with a subpoena demanding documents about the development and management of PYUSD, has now come to an end, paving the way for broader adoption of the stablecoin.

"The staff of the Enforcement Division of the U.S. Securities and Exchange Commission has formally closed its inquiry into the company's stablecoin, PYUSD, without any further action being sought," PayPal said in the filing.

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