The U.S. Securities and Exchange Commission (SEC) has officially closed its investigation into PayPal’s dollar-backed stablecoin, PayPal USD (PYUSD), without pursuing any enforcement actions. This decision concludes a regulatory process that began over a year ago, signaling a significant development for both the company and the broader cryptocurrency landscape.
In November 2023, PayPal received a subpoena from the SEC’s Division of Enforcement pertaining to the PayPal USD stablecoin, which required the company to produce certain documents. However, on February 2025, the SEC communicated its decision to close the inquiry without any enforcement action, as disclosed in a recent filing by PayPal.
This filing represents another instance of the SEC opting to withdraw its investigations and lawsuits against cryptocurrency firms, as the regulator has informed more than a dozen companies that it would cease actions against them.
Stablecoins, which are digital tokens pegged to fiat currencies like the U.S. dollar, have emerged as a critical area of focus in ongoing discussions regarding cryptocurrency regulation. The SEC has raised questions about whether these instruments resemble securities or money market funds, which heightens scrutiny on industry leaders such as Circle and Tether. PayPal’s significant market presence has drawn additional attention to these discussions, highlighting the intersection of traditional finance and digital currency.
For PayPal, the conclusion of the SEC’s investigation alleviates a substantial regulatory concern as the company continues to innovate within blockchain-based payments. PYUSD was launched on the Ethereum blockchain in August 2023, designed as a dollar-pegged stablecoin backed by short-term U.S. Treasury bills and dollar deposits. This stablecoin facilitates peer-to-peer payments, commerce, and utilization in decentralized applications.
The development occurs amid a burgeoning interest in stablecoins, with numerous companies, including Ripple, Mastercard, Visa, and Dutch bank ING, entering the stablecoin market. Ripple has even made headlines with reports of a $4 billion offer to acquire the stablecoin issuer, Circle. Leading venture firm Andreessen Horowitz (a16z) has suggested that stablecoins represent a transformative moment in money transfers, similar to the impact instant messaging had on global communication.
In response to increasing competition in the stablecoin space, PayPal has announced plans to offer U.S. users a competitive 3.7% yield on balances held in PYUSD, further increasing its appeal. Currently, PayPal’s stablecoin has achieved a market capitalization of approximately $887 million, positioning it as the sixth-largest stablecoin issuer, according to CoinMarketCap data.
For additional insights, check out our article: Stablecoin Market Could Grow to $2T by End-2028: Standard Chartered
Disclaimer: This article was generated using AI tools and reviewed by our editorial team to ensure accuracy and compliance with our standards. For more information, please refer to our full AI Policy. This article may also include information from external sources, credited when applicable.
