SEC Drops PayPal Stablecoin Probe, PYUSD Gains 75% in 2025

The U.S. Securities and Exchange Commission (SEC) has concluded its investigation into PayPal's stablecoin, PYUSD, without taking any enforcement action. This decision marks the latest in a series of cryptocurrency probes that the agency has abandoned under the current administration. The SEC had initially issued a subpoena in November 2023, prompting PayPal to disclose the inquiry in a filing on May 1. The investigation focused on whether PYUSD, which is pegged to the U.S. dollar, complied with securities regulations. PayPal's disclosure indicated that the SEC's enforcement division had conducted a thorough review but ultimately decided not to pursue any charges. This outcome is significant as it suggests a shift in the regulatory approach towards stablecoins, which have been a subject of intense scrutiny due to their potential impact on financial stability and investor protection. The decision to drop the investigation without enforcement action may signal a more lenient stance by the SEC towards stablecoins, provided they adhere to regulatory guidelines. However, it also underscores the need for clear and consistent regulatory frameworks to guide the development and use of these digital assets. The closure of this investigation is likely to be welcomed by the cryptocurrency industry, which has been seeking greater regulatory clarity. It remains to be seen how this decision will influence future regulatory actions and the broader landscape of digital currencies.

PayPal has stated that its stablecoin, PYUSD, is fully backed by dollar deposits, including short-term treasuries and cash equivalents, and is 100% redeemable for U.S. dollars. Despite this backing, PYUSD has struggled to gain significant market share in a competitive landscape dominated by rivals such as Tether and Circle. As of the latest data, PYUSD has a market capitalization of just $880 million, which is less than 1% of Tether’s market capitalization. This disparity highlights the challenges faced by PYUSD in competing with more established stablecoins. However, PYUSD has shown signs of growth this year, with a 75% increase in its circulating supply since the beginning of 2025. This growth, though modest, indicates a potential for further adoption and expansion. The stablecoin remains down 14% from its peak supply of just over $1 billion in August 2024, suggesting that while there is room for improvement, the stablecoin has the potential to regain its momentum.

PayPal's recent initiatives may further bolster the growth of PYUSD. On April 23, the company announced a new loyalty offering that will enable U.S. users to earn 3.7% annually for holding PYUSD on the platform. This incentive is designed to attract more users and increase the adoption of PYUSD. Additionally, on April 24, PayPal announced a partnership with Coinbase to further drive the adoption of PYUSD. This collaboration is expected to create new and innovative use cases for the stablecoin, positioning it at the center of the cryptocurrency ecosystem. Alex Chriss, PayPal President and CEO, expressed enthusiasm about the partnership, stating that it will drive new, exciting, and innovative use cases for PYUSD. These developments are likely to enhance the visibility and utility of PYUSD, potentially leading to increased adoption and market share.

PayPal's robust first-quarter earnings and significant share repurchase activities further underscore the company's financial strength and strategic focus. The firm reported earnings of $1.33 per share in the first quarter, surpassing analyst expectations of $1.16. Revenue rose 1% from a year before to $7.8 billion, demonstrating the company's ability to maintain growth despite challenging market conditions. These financial results, combined with the company's strategic initiatives, position PayPal as a strong player in the digital payments and cryptocurrency sectors. The closure of the SEC investigation and the company's recent announcements are likely to contribute to PayPal's continued growth and success in the evolving landscape of digital currencies.