SEC Drops Probe Into PayPal’s Dollar-Pegged Stablecoin—Regulators Tap Out

Another day, another regulatory retreat—Wall Street’s watchdogs can’t decide if crypto is a threat or just too tedious to police.

The SEC quietly shelved its investigation into PayPal’s stablecoin, PYUSD, leaving the payments giant free to keep minting its digital dollars. No charges. No fines. Just the sound of bureaucratic shrugs.

Stablecoins: Too boring to fail? While the SEC chases flashier targets like Ethereum ETFs, PayPal’s vanilla-flavored crypto gets a hall pass. Maybe regulators only crack down when there’s enough volatility to justify their coffee breaks.

One less hurdle for crypto’s march into mainstream finance—and another reminder that the rulebook gets rewritten when Big Tech comes knocking.

Trump-Era SEC Scales Back Crackdown On Digital Assets

The move comes as part of a broader shift at the SEC. Since Trump took office in Jan. 2025, the agency has scaled back its regulatory crackdown on digital asset firms.

It has dropped or paused investigations and lawsuits against several major crypto companies, including Gemini, Coinbase, Ripple Labs and Uniswap Labs, among others.

Enforcement actions against high-profile individuals such as Justin Sun and Hex founder Richard Heart have also been shelved.

PayPal Gains Breathing Room As Regulatory Pressure Eases

PayPal launched PYUSD in Aug. 2023 in partnership with Paxos Trust Company, a US-regulated entity. The stablecoin, backed 1:1 by the US dollar, is available to US users on PayPal and Venmo and can be transferred to external wallets, subject to compliance checks.

PYUSD has earlier surpassed $1b in market cap, signaling strong demand and growing traction within the digital payments ecosystem, though its valuation has since declined.

The closure of the SEC’s inquiry could boost confidence among institutional partners and retail users, especially as stablecoins remain under close global scrutiny. While no comprehensive US regulation currently governs stablecoins, Congress continues to debate a legal framework that could reshape how such assets are issued and used.

SEC Exit Offers Relief, But Uncertainty Still Shadows PYUSD

PayPal noted that the regulatory environment remains fluid. As a result, future legislation could bring new costs or risks for stablecoin issuers and partners. Additionally, the company acknowledged potential reputational harm. This could occur if its issuer partner faces legal trouble or if PYUSD is used in illicit transactions.

Even so, the SEC’s decision to abandon its investigation adds to a growing list of crypto enforcement rollbacks. This trend reflects a broader shift toward lighter regulatory oversight. For PayPal and other fintech firms moving into stablecoins, it suggests that regulatory headwinds may be easing, at least for now.