The SEC drops investigation into PayPal’s stablecoin

The US Securities and Exchange Commission (SEC) has formally closed its investigation into PayPal Holdings, Inc.’s stablecoin PayPal USD (PYUSD), according to a quarterly report filed by the company for the period ending March 31, 2025.

The announcement was made in a routine 10-Q filing submitted to the SEC and published on April 29. PayPal did not specify the basis of the inquiry in the filing, but confirmed that the federal regulator had concluded its review without recommending enforcement action.

PayPal has been treading uncertain regulatory waters since launching PYUSD, a stablecoin pegged to the US dollar and issued in partnership with Paxos Trust Company. The SEC’s seizure of the investigation could allow the financial firm to conduct its crypto operations more freely.

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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