The U.S. Securities and Exchange Commission has concluded its investigation into PayPal’s dollar-backed stablecoin, PayPal USD (PYUSD), without taking enforcement action, the company announced. In November 2023, PayPal received a subpoena from the SEC Division of Enforcement regarding PayPal USD stablecoin, requesting documents. In February 2025, the SEC informed PayPal that it was closing the inquiry without enforcement action. This development marks the latest move by the SEC to drop investigations and lawsuits against crypto companies.

Stablecoins, digital tokens pegged to fiat currencies like the U.S. dollar, have become a focal point in the regulatory debate surrounding cryptocurrencies. Regulators are questioning whether these instruments resemble securities or money market funds, leading to increased scrutiny on issuers such as Circle and Tether. PayPal’s involvement in the stablecoin space has attracted attention due to its size, brand recognition, and presence across traditional and digital finance.

The resolution of the SEC’s investigation is a positive development for PayPal as it continues to expand its blockchain-based payment offerings. 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, intended for use in peer-to-peer payments, commerce, and decentralized applications.

The news comes at a time when stablecoins are gaining popularity among both crypto and traditional finance companies. Ripple, Mastercard, Visa, Dutch bank ING, and Stripe are among the companies entering the stablecoin market. PayPal recently announced plans to offer U.S. users a 3.7% yield on balances of its PYUSD to compete in the growing stablecoin market. The company’s stablecoin currently has a market cap of $887 million, ranking it sixth among stablecoin issuers according to CoinMarketCap.

Overall, stablecoins are seen as a disruptive innovation in the payments industry, with the potential to revolutionize money transfers similar to how instant messaging transformed cross-border communication. As competition in the stablecoin space heats up, companies are looking to differentiate themselves and attract users by offering attractive yields and innovative features.