EddieJayonCrypto
30 Apr 25
The U.S. Securities and Exchange Commission has closed its investigation into PayPal’s dollar-backed stablecoin, PYUSD, without pursuing enforcement action. This decision, revealed in PayPal’s Q1 2025 filing, follows a November 2023 subpoena that raised questions about whether PYUSD was an unregiste...
The U.S. Securities and Exchange Commission (SEC) has officially closed its investigation into PayPal’s dollar-backed stablecoin, PYUSD, without taking enforcement action, as revealed in PayPal’s Q1 2025 filing.This move follows a November 2023 subpoena that questioned whether PYUSD qualified as an unregistered security. The SEC’s closure removes a significant legal risk for both PayPal and the issuer, Paxos, while signaling a cautious regulatory stance toward certain stablecoins.Launched by Paxos in August 2023, PYUSD is fully backed by cash and U.S. Treasury bills and is integrated into PayPal’s payment platforms, including Venmo. Although PYUSD currently holds a modest market share—about $879 million in circulation, less than 0.5% of the $241 billion global stablecoin market—PayPal aims to expand PYUSD payment settlements to over 20 million small businesses by 2025.The SEC’s decision aligns with recent guidance that excludes certain fully reserved, non-yield-bearing USD-backed stablecoins from securities classification, though broader stablecoin regulation remains unresolved. The agency’s approach suggests that Congress may ultimately define the stablecoin regulatory framework.Despite the SEC’s closure of this particular probe, other investigations into PayPal continue, including a Consumer Financial Protection Bureau inquiry into PayPal Credit and an antitrust review by Germany’s Federal Cartel Office, yet none relate to PYUSD.PYUSD’s exemption from enforcement also supports legislative momentum behind the GENIUS Act, a bipartisan Senate bill proposing a tailored regulatory path for payment stablecoins, including mandates for 1:1 reserve backing and monthly disclosures.While PayPal acknowledges ongoing custodial and legal uncertainties around digital asset storage and bankruptcy protections, the SEC’s decision brings clarity amid a fragmented regulatory landscape, marking a significant step for the evolving stablecoin ecosystem in the United States.