The U.S. Securities and Exchange Commission (SEC) has formally closed its investigation into PayPal’s dollar-pegged stablecoin, PYUSD, without pursuing enforcement action, according to the company’s April 29 regulatory filing.
The decision removes a key regulatory uncertainty for the payments giant and its partner Paxos, which jointly launched the stablecoin in August 2023.
The SEC’s inquiry began in November 2023 when PayPal received a subpoena requesting documents about PYUSD’s structure, reserves, and launch. After months of cooperation from PayPal, the SEC notified the company in February 2025 that it was closing the case without further action. The closure aligns with recent SEC decisions to end probes into crypto firms like Coinbase, Crypto.com etc.
Despite PayPal’s brand recognition, PYUSD has struggled to compete with dominant stablecoins like Tether (USDT) and Circle’s USDC.
As of April 2025, its market capitalization stands at $880 million-a 75% surge since January but still 14% below its August 2024 peak of over $1 billion. The token remains fully backed by cash deposits, short-term Treasuries, and cash equivalents, with 1:1 redeemability for U.S. dollars.
The SEC’s decision signals a potential shift in approach under new leadership, moving away from the aggressive enforcement stance seen during Gary Gensler’s tenure. However, stablecoin regulation remains fragmented, with lawmakers still debating frameworks like the GENIUS Act (S. 919), which proposes standardized reserve requirements and issuer licensing.
The closure provides PayPal with regulatory breathing room to expand PYUSD’s use cases, including cross-border payments and e-commerce transactions across its Venmo and PayPal networks. It also sets a precedent for other financial institutions exploring stablecoin issuance amid ongoing legislative uncertainty.
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