SEC Drops Probe into PayPal’s Stablecoin as Firm Eyes PYUSD Growth Through Rewards and Partnerships

PayPal revealed that it had received a subpoena from the SEC’s Division of Enforcement in November 2023, requesting documentation related to the stablecoin. However, the company was informed in February 2025 that the inquiry had been dropped, with no penalties or charges issued.

Backed entirely by U.S. dollar deposits, cash equivalents, and short-term treasuries, PYUSD has been marketed by PayPal as a fully redeemable and secure stablecoin. Yet, despite its strong institutional backing, it continues to face stiff competition in a market dominated by heavyweights like Tether (USDT) and Circle’s USDC.

As of now, PYUSD has a market cap of approximately $880 million—less than 1% of Tether’s $148.5 billion. Still, 2025 has shown signs of momentum, with PYUSD’s circulating supply growing by 75% year-to-date, according to CoinGecko data . The figure remains 14% below its all-time high in August 2024.

To drive adoption, PayPal recently introduced a new loyalty program offering U.S. users an annual yield of 3.7% for holding PYUSD on its platform. The company also teamed up with Coinbase on April 24 to expand the stablecoin’s reach, positioning PYUSD at the heart of collaborative innovation in the crypto space.

“We are excited to drive new, exciting, and innovative use cases together with Coinbase and the entire cryptocurrency community,”

said PayPal CEO Alex Chriss in a statement.

The regulatory green light comes as PayPal posted strong first-quarter earnings. The firm exceeded expectations with earnings per share of $1.33—beating analysts’ estimates of $1.16. Revenue rose 1% year-over-year to $7.8 billion, further boosted by an aggressive share repurchase program.

Additionally, by integrating across its services, PayPal aims to boost the adoption of its USD-pegged stablecoin (PYUSD). The payment giant is planning to introduce PYUSD as an option for its over 20 million small to medium-sized merchants to pay vendors before the end of 2025. 

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