US SEC quietly closes PayPal’s PYUSD inquiry

When PayPal rolled out its own dollar-tied stablecoin, PYUSD, back in August 2023, it was ready to compete with the likes of Tether and Circle, only for the US Securities and Exchange Commission to start probing the company for issuing the stablecoin.

Fast-forward nearly two years, and the chatter around a looming SEC enforcement action is finally over.

In its latest quarterly filing, PayPal revealed that the SEC told them in February 2025 that the nearly two-year investigation into PYUSD is officially closed without fines, penalties, or further questions.

How the SEC inquiry into PayPal’s PYUSD unfolded

The story began in November 2023, when PayPal got a subpoena asking for all sorts of details about how PYUSD works: how the tokens were issued, how the reserves were managed, and so on.

Under the hood, PYUSD isn’t floating on thin air: it’s backed one-for-one by short-term US Treasuries, cash deposits and other safe assets, all held by Paxos Trust on Ethereum.

But asking for the paperwork is standard practice if you’re dealing in dollars-on-blockchain, and ultimately, the SEC’s Division of Enforcement concluded there wasn’t anything untoward to pursue.

Notably, PayPal isn’t alone in getting a pass from the US SEC lately.

Under its new Crypto Task Force, the SEC has been wound down probes into Robinhood Crypto, Crypto.com, and Uniswap Labs too.

After years of “regulation-by-enforcement,” you could say the agency is taking a gentler tack—though it’s still preaching rigorous auditing and full transparency around the dollars (and Treasuries) that back these tokens.

Meanwhile, back in Congress, lawmakers are hustling to put stablecoin rules into law.

The House Financial Services Committee green-lighted the STABLE Act in early April, and the Senate’s Banking Committee approved the GENIUS Act in mid-March.

Both bills aim to lock in one-to-one dollar backing, guarantee daily redemptions and put federal regulators (either the Fed or the OCC, depending on the bill) squarely in charge.

Proponents say it’s all about consumer protection and preserving the dollar’s role in digital finance; critics worry that overzealous rules could hamstring US issuers and send stablecoin business overseas.

PYUSD has seen steady growth despite a rocky start

PYUSD didn’t exactly explode out of the gate. At the start of 2025, it had less than 500 million in circulation, tiny compared to USDT and USDC, which together account for nearly all stablecoins traded.

However, in just a few months, PYUSD’s circulating supply has climbed roughly 75%, reaching about 880 million today.

A big part of that bump came when PayPal teamed up with Coinbase for zero-fee trading, allowing anyone on Coinbase to swap PYUSD for dollars (and back) at a one-to-one rate without paying a cent.

PayPal has even teased loyalty rewards and other perks to make PYUSD feel more like a payoff for using the coin, rather than just another token to hold.

Even with these gains, PYUSD is still lagging behind USDT and USDC as people and institutions tend to stick with stablecoins they already trust.

PYUSD looks to make a strong push

With the SEC probe behind it and new laws potentially around the corner, PayPal is in a strong spot to push PYUSD further, especially if it weaves it into new tokenised-asset projects, like bond and real-estate tokens.

The broader trend is clear: stablecoins are no longer a fringe experiment, but a budding financial utility, one that needs clear rules, solid reserves, and real-world use cases to thrive.

At the end of the day, PYUSD’s future depends on three things: a stable and predictable regulatory environment, perks and partnerships that set it apart, and actual demand from people and institutions eager to use blockchain-based dollars in everyday finance.

If PayPal can nail those three, PYUSD may yet earn its place alongside the big two in the stablecoin arena, and this quiet victory over the SEC is a strong first step.

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