SEC Ends PayPal PYUSD Investigation, Clearing Major Regulatory Hurdle for Its Stablecoin
By Aoyon Ashraf, AI Boost May 1, 2025, 7:47 PM
The U.S. Securities and Exchange Commission has concluded its investigation into PayPal’s dollar-backed stablecoin USD (PYUSD) without taking any enforcement action, ending a regulatory probe that began more than a year ago, the company said.
“In November 2023, we received a request from the SEC’s Division of Enforcement regarding the PayPal USD stablecoin. The request was for documents. In February 2025, the SEC announced that it had closed its investigation without pursuing enforcement action,” PayPal said in a statement this week.
Wednesday’s announcement was the latest move by the SEC to end investigations and lawsuits against crypto companies. The regulator has notified more than a dozen companies that it is ending its investigations and cases.
Read more: PayPal faces SEC inquiry over its PYUSD stablecoin
Stablecoins, which are digital tokens pegged to fiat currencies like the U.S. dollar, have become a key element in discussions about how cryptocurrency should be regulated. Regulators are questioning whether such instruments are similar to securities or money markets, which could lead to more scrutiny of issuers like Circle and Tether. PayPal’s involvement has attracted additional attention because of its scale, brand recognition, and reach across both traditional and digital finance.
For PayPal, the conclusion of the SEC investigation clears a major regulatory hurdle as the company continues to develop its blockchain payments. PYUSD launched on the Ethereum platform in August 2023 as a dollar-backed stablecoin backed by short-term U.S. Treasury bills and dollar deposits, intended for use in peer-to-peer payments, trading, and decentralized applications.
The news also comes amid growing interest in stablecoins among crypto and TradFi companies. The likes of Ripple, Mastercard, Visa, Dutch bank ING, and Stripe are all jumping into the stablecoin space. Ripple has reportedly offered $4 billion or $5 billion to acquire stablecoin issuer Circle. Meanwhile, venture capital firm Andreessen Horowitz (a16z) has said stablecoins are having a “WhatsApp moment” for remittances, with the potential to disrupt the payments industry in the same way instant messaging disrupted international calling and texting.
Amid growing competition, PayPal recently announced that it would offer U.S. users a 3.7% yield on PYUSD balances to improve its competitiveness in the stablecoin race. The payments giant’s stablecoin has a market cap of $887 million, making it the sixth-largest stablecoin issuer, according to CoinMarketCap.
Read more: Stablecoin market may grow
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