SEC Ends PayPal's Stablecoin (PYUSD) Investigation With No Enforcement Action

PayPal (NASDAQ: PYPL) announced that the U.S. Securities and Exchange Commission (SEC) has closed its investigation into the company’s USD-backed stablecoin, PayPal USD (PYUSD), with no enforcement action taken.

SEC Ends PayPal Stablecoin Probe, No Enforcement Action

The payments provider disclosed in the Q1 2025 earnings report that the SEC’s Division of Enforcement notified the company in February that it had concluded its inquiry into PYUSD. The investigation began in November 2023, when the SEC issued a subpoena requesting documents related to the stablecoin. 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. The company posted earnings of $1.33 per share, surpassing Wall Street forecasts, with revenue rising 1% year-over-year to $7.8 billion. PayPal also highlighted the completion of significant share repurchase activities during the quarter.

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, in February it closed its investigation into Robinhood Crypto, and earlier this year, it wrapped up inquiries involving Coinbase and Gemini.

Will PYUSD Gain Traction?

PYUSD, launched in August 2023, is marketed as being fully backed by U.S. dollar deposits, short-term Treasuries, and cash equivalents. The stablecoin is designed to be redeemable 1:1 for U.S. dollars.

Despite these assurances, PYUSD has so far captured 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.

Recent months, however, have seen a pickup in PYUSD’s growth, with circulating supply rising 75% since the start of 2025, according to data from CoinGecko. However, the stablecoin’s supply remains below 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.