SEC ends scrutiny of PayPal's PYUSD stablecoin

The US Securities and Exchange Commission (SEC) has formally closed its investigation into PayPal Holdings, Inc.'s stablecoin PayPal USD (PYUSD).

The US Securities and Exchange Commission (SEC) has formally closed its investigation into PayPal Holdings, Inc.’s stablecoin PayPal USD (PYUSD), according to a quarterly report filed by the company for the period ending March 31, 2025.

The announcement was made in a routine 10-Q filing submitted to the SEC and published on April 29. PayPal did not specify the basis of the inquiry in the filing, but confirmed that the federal regulator had concluded its review without recommending any further action.

The SEC’s probe began earlier this year, aiming to examine whether PYUSD should be registered with the SEC. The inquiry also focused on the company’s crypto-related activities.

The news severs a period of uncertainty for PayPal, which began with the introduction of PYUSD in August 2023. At the time, the company positioned it as the first major U.S. financial technology firm to issue its own stablecoin.

PYUSD, a stablecoin pegged to the U.S. dollar, was created in partnership with Paxos Trust Company and designed to facilitate digital payments, remittances, and e-commerce transactions. It was set to integrate with PayPal’s existing services and products, including Venmo.

Paxos’s involvement with PayPal, in addition to a stablecoin launch, caught the Gary Gensler-led SEC’s interest. Gensler’s administration has maintained that most crypto tokens, especially those digital assets linked to large corporations, fall under federal securities law.

PayPal opened its doors for the investigations and agreed to cooperate with the authorities.

“The subpoena requests the production of documents. We are cooperating with the SEC in connection with this request,” it said in an end-of-2023 statement.

According to the Q1 2025 filing, the SEC staff notified PayPal that it had concluded its investigation and would not be recommending any enforcement action.

“The staff of the SEC’s Division of Enforcement has notified us that it has concluded its investigation and does not intend to recommend any enforcement action,” PayPal noted in the legal proceedings section of the report.

PayPal also posted its Q1 earnings, showing that it had collected $7.79 billion in net revenues, a slight increase from $7.69 billion in the same period last year. Net income reached $1.29 per diluted share, up from $1.10 a year earlier.

As of March 31, 2025, PayPal reported holding significant investments in crypto-related entities, although exact figures related to PYUSD distribution or usage were not disclosed in the filing. The company mentioned adopting new crypto asset accounting standards at the beginning of 2025, adhering to the fair value measurement model for its crypto holdings.

Moreover, the filing stated that the company was subject to various other legal and regulatory proceedings, which are still pending.