The SEC issued a subpoena to PayPal in late 2023 regarding its dollar-backed stablecoin.
The U.S. Securities and Exchange Commission has closed its investigation into PayPal USD (PYUSD), the company’s dollar-backed stablecoin, without taking enforcement action, marking the end of a regulatory chapter that had begun over a year ago, according to the company.
In a filing this week, PayPal disclosed that it received a subpoena from the U.S. SEC Division of Enforcement in November 2023 regarding the PayPal USD stablecoin, requesting document production. The SEC informed the company in February 2025 that it was closing the inquiry without taking enforcement action.
SEC Closes PayPal Stablecoin Probe Without Enforcement, Clearing Path for PYUSD Expansion
Wednesday’s filing marks the latest move by the SEC to drop investigations and lawsuits against crypto companies. The regulator has informed over a dozen firms that it will drop investigations and cases.
Stablecoins, which are digital tokens pegged to fiat currencies such as the U.S. dollar, have become a central topic in the discussion over crypto regulation. Regulators have raised questions about whether these instruments resemble securities or money market funds, potentially subjecting issuers like Circle and Tether to more scrutiny. PayPal’s involvement has attracted additional attention due to its size, brand recognition, and its broad reach in both traditional and digital finance.
By resolving the SEC’s probe, PayPal has removed a major regulatory hurdle as it continues expanding into blockchain-based payments. Previously, the company launched PYUSD on Ethereum in August 2023 as a dollar-pegged stablecoin, backed by short-term U.S. Treasury bills and dollar deposits. Specifically, PayPal designed the stablecoin for use in peer-to-peer transactions, commerce, and decentralized applications.
The news also arrives as stablecoins gain significant traction among both crypto and traditional financial firms. Companies like Ripple, Mastercard, Visa, Dutch bank ING, and Stripe are entering the stablecoin space. Ripple has even reportedly offered $4 billion to $5 billion to acquire stablecoin issuer Circle. Additionally, venture firm Andreessen Horowitz (a16z) stated that stablecoins are experiencing a “WhatsApp Moment” for money transfers, with the potential to revolutionize the payments industry in the same way instant messaging transformed cross-border phone calls and texts.
Amid growing competition, PayPal recently announced that it will offer U.S. users a 3.7% yield on their PYUSD balances to strengthen its position in the stablecoin market. CoinMarketCap data reports that the payment giant’s stablecoin holds a market cap of $887 million, ranking it sixth among stablecoin issuers.
