SEC Drops Probe Into PayPal’s Stablecoin—Regulators Take a Coffee Break
In a move that surprised exactly no one in crypto circles, the SEC quietly shelved its investigation into PayPal’s stablecoin project. Was it the lack of jurisdiction—or just regulatory fatigue?
Behind the scenes: The agency spent months chasing shadows before realizing stablecoins might not fit neatly into their ’How to Sue Everything’ playbook. Meanwhile, Wall Street’s legacy stablecoin (the US dollar) continues its monopoly—complete with inflation and bailouts.
Closing thought: When even PayPal gets a regulatory pass, you know the rules are being written mid-game. Place your bets—the house always wins.
SEC ends scrutiny on PYUSD
PayPal introduced PYUSD in August 2023, becoming the first major US financial technology firm to issue its own stablecoin. The token was designed to facilitate digital payments, remittances, and e-commerce transactions within PayPal’s ecosystem, including Venmo.
Paxos’s involvement with PayPal, in addition to a stablecoin launch, caught the Gary Gensler-led SEC’s interest. Gensler’s administration took the position that most crypto tokens, especially those digital assets tied to large corporations, fall under securities law.
PayPal opened its doors for the investigations and agreed to cooperate with the authorities.
“The subpoena requests the production of documents. We are cooperating with the SEC in connection with this request,” it said in an end-of-2023 statement.
According to the Q1 2025 filing, the SEC staff notified PayPal that it had concluded its investigation.
“The staff of the SEC’s Division of Enforcement has notified us that it has concluded its investigation and does not intend to recommend an enforcement action,” PayPal noted in the legal proceedings section of the report.
PayPal also posted its Q1 earnings, which showed that it had collected $7.79 billion in net revenues, up slightly from $7.69 billion in the same quarter last year. Net income also increased to $1.29 per diluted share.
As of March 31, 2025, PayPal reported holding significant crypto-related investments, although exact figures related to PYUSD distribution or usage were not detailed in the filing. The company disclosed that it adopted new crypto asset accounting standards at the beginning of 2025, in compliance with the fair value measurement model.
PayPal to continue with crypto product offerings
Under a microscopic watch from financial regulators, PayPal has been expanding its crypto offerings over the past two years. The platform’s users can buy, hold, and sell crypto like Bitcoin and Ethereum, but it moved into blockchain infrastructure by launching PYUSD as a native means of payment.
PYUSD adoption has yet to reach mass scale, but PayPal is actively promoting the stablecoin’s utility for peer-to-peer payments and merchant checkout. The coin is backed 1:1 by U.S. dollar deposits and short-term Treasuries and is subject to monthly attestations published by Paxos.
As reported by Cryptopolitan, the rewards will accrue daily and be disbursed monthly, and will be paid in PYUSD itself.
According to Jose Fernandez da Ponte, senior vice president and general manager of blockchain, crypto, and digital currencies at PayPal, the company views stablecoins as “the next generation of payment infrastructure.”
“Stablecoins can change the expense profile of payments. But we know that’s a long-term journey,” said da Ponte.
CEO Alex Chriss added that PayPal could soon integrate stablecoin functionality into other financial products, which will drive down transaction costs and improve speed for merchants and consumers alike.
Through a partnership revealed last week, US-based publicly listed crypto exchange Coinbase said it will forgo transaction fees for PayPal PYUSD transactions on its platform to increase stablecoin usage in global payment networks.
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