PayPal’s PYUSD Cleared by SEC Amid Stablecoin Boom

The U.S. Securities and Exchange Commission (SEC) has officially closed its investigation into PayPal's stablecoin, PayPal USD (PYUSD), without pursuing enforcement action. This brings a regulatory chapter to an end that began in November 2023, when the SEC issued a subpoena requesting documents related to PYUSD. According to PayPal’s recent filing, the agency informed the company in February 2025 that it would not move forward with the case.

This development removes a significant regulatory hurdle for PayPal as it expands its footprint in blockchain-based payments. Launched in August 2023 on the Ethereum blockchain, PYUSD is a dollar-backed stablecoin supported by U.S. Treasury bills and dollar deposits. It is intended for peer-to-peer transfers, commerce, and decentralized finance (DeFi) applications.

Stablecoins have become a central focus in crypto regulation debates, with questions around whether they qualify as securities or money market funds. PayPal’s entry into the space brought heightened scrutiny, given its global presence in both traditional and digital finance sectors.

The SEC’s decision aligns with a broader trend of dropping investigations into crypto firms, signaling a potential shift in regulatory posture. Reports indicate the SEC has closed inquiries into more than a dozen crypto companies recently.

PayPal is doubling down on PYUSD’s appeal by offering U.S. users a 3.7% yield on stablecoin balances—part of a wider push to compete in the increasingly crowded stablecoin market. The token currently ranks sixth by market capitalization, sitting at $887 million.

As major players like Ripple, Visa, Mastercard, Stripe, and ING enter the stablecoin race, PYUSD’s regulatory clearance positions PayPal to compete more aggressively. With support from TradFi and crypto firms alike, stablecoins are being hailed by venture firms like a16z as the “WhatsApp moment” for global money transfers.