News

May 3, 2025

SEC Ends Investigation into PayPal’s Stablecoin PYUSD, Fueling Speculation on Future of Stablecoins in Crypto Market

"Digital illustration showcasing PayPal logo amidst various stablecoin logos such as Ripple, Mastercard, Visa, ING and Stripe with a backdrop of Ethereum, U.S. Treasury bills, and PYUSD symbols. Main color palette used are Orange, Dark Blue, and Midnight Blue reflecting conclusion of SEC investigation into PayPal's PYUSD stablecoin. Image size of 1200 x 628 pixels."

SEC Stops Investigation Into PayPal USD Stablecoin

According to an official statement, the U.S. Securities and Exchange Commission (SEC) has ceased its inquiry into PayPal’s dollar-backed stablecoin, PayPal USD (PYUSD), without imposing any enforcement action. This marks the closure of a year-long regulatory saga. Back in November 2023, the SEC Division of Enforcement had subpoenaed PayPal over the PYUSD stablecoin. The American financial regulatory body had demanded the production of specific documents. Fast forward to February 2025, the SEC chose to terminate this query without imposing any enforcement action, a fact made public by PayPal through a recent filing. This event aligns with the SEC’s latest trend of discontinuing investigations and lawsuits against businesses operating within the cryptocurrency sector. Several companies have been notified that their investigations and cases would be dropped by the regulatory body.

Stablecoins under The Regulatory Lens

Stablecoins – digital tokens equivalent in value to fiat currencies such as the U.S. dollar – occupy a central position in the regulation debate surrounding cryptocurrencies. In particular, regulators have been examining whether these instruments behave like securities or money market funds. Should this be proven true, issuers including Circle and Tether could face increased scrutiny. PayPal’s involvement in the stablecoin space has garnered additional attention due to its scale, brand visibility, and footprint across both traditional and digital finance areas.

Clear Regulatory Path for PayPal

For PayPal, the conclusion of the SEC probe clears a significant regulatory roadblock, supporting the company’s efforts to further embed itself within the world of blockchain-based payments. The PYUSD stablecoin was launched by the firm on the Ethereum network in August 2023. This dollar-pegged stablecoin is backed by short-term U.S. Treasury bills and dollar deposits, making it suitable for peer-to-peer payments, commerce, and use within decentralized applications.

Rising Popularity of Stablecoins

The latest development coincides with a time where stablecoins are becoming increasingly popular among traditional financial institutions (TradFi) and cryptocurrency enterprises. Companies including Ripple, Mastercard, Visa, Dutch bank ING, and Stripe have all recently joined the stablecoin game. Additionally, Ripple has reportedly offered between $4 billion to $5 billion to acquire stablecoin issuer Circle. Venture capital firm Andreessen Horowitz highlighted that stablecoins were in their “WhatsApp Moment”. The firm suggested that these unique digital currencies hold the potential to cause massive disruption within the payments sector, akin to how instant messaging transformed international communication via phone calls and texts. Amid mounting competition within the stablecoin sector, PayPal disclosed its plan to offer its U.S. users a yield of 3.7% on their PYUSD balances, a move aimed at enticing broader use of its stablecoin. As of now, the payment behemoth’s stablecoin, PYUSD, boasts a market cap of $887 million, ranking in sixth place among stablecoin issuers. Furthermore, Standard Chartered has projected substantial growth for this sector, estimating that the stablecoin market could expand up to $2 trillion by the end of 2028. The increasing interest in stablecoins further emphasizes the need for clarity regarding regulatory norms surrounding these increasingly popular digital assets. This surge in popularity presents both opportunities and challenges for businesses across the financial landscape. Policymakers and companies alike need to keep an eye on the ball to ensure the development and growth of stablecoins takes place in a manner that is both secure and in compliance with necessary regulations.
James Carter

Financial Analyst & Content Creator | Expert in Cryptocurrency & Forex Education

James Carter is an experienced financial analyst, crypto educator, and content creator with expertise in crypto, forex, and financial literacy. Over the past decade, he has built a multifaceted career in market analysis, community education, and content strategy. At AltSignals.io, James leads content creation for English-speaking audiences, developing articles, webinars, and guides that simplify complex market trends and trading strategies. Known for his ability to make technical finance topics accessible, he empowers both new and seasoned investors to make informed decisions in the ever-evolving world of digital finance.

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