SEC Closes Investigation into PYUSD
In a significant development for the cryptocurrency sector, the US Securities and Exchange Commission (SEC) has concluded its investigation into PayPal’s dollar-backed stablecoin, PYUSD, without pursuing any enforcement actions. This decision was revealed by PayPal in a filing on Tuesday, marking another notable conclusion to a crypto-related inquiry during the tenure of former President Donald Trump.
Details of the Investigation
The SEC’s Division of Enforcement had initially issued a subpoena in November 2023, which compelled PayPal to provide documentation concerning its stablecoin. However, by February 2025, the agency communicated to PayPal that the investigation had been formally closed without any further legal repercussions.
This conclusion aligns with a broader trend observed at the SEC since the beginning of Trump’s presidency in January 2025, where there has been a noticeable reduction in the agency’s stringent regulatory approach towards digital asset firms. Numerous investigations and lawsuits targeting significant players in the crypto market, including firms like Gemini, Coinbase, Ripple Labs, and Uniswap Labs, have either been abandoned or put on hold. Additionally, enforcement actions against notable individuals in the crypto space, such as Justin Sun and Hex founder Richard Heart, are also on pause.
Overview of PYUSD
PayPal introduced PYUSD in August 2023, collaborating with Paxos Trust Company, a regulated US entity. The stablecoin is pegged to the US dollar on a one-to-one basis and is accessible to PayPal and Venmo users, with the capability of transferring to external wallets after verifying compliance conditions. At its peak, PYUSD’s market capitalization exceeded $1 billion, highlighting significant market demand and acceptance within the digital payments arena, despite a recent decline in its value.
Impact on the Crypto Sector
The SEC’s decision to close its inquiry could enhance the confidence of both institutional stakeholders and retail consumers, particularly at a time when stablecoins are under heightened scrutiny internationally. Although no comprehensive regulatory framework for stablecoins exists in the US, Congress continues to deliberate legislation that could redefine the operational landscape for these digital assets.
Despite the SEC’s closure of its inquiry bringing some relief, PayPal has acknowledged the evolving regulatory landscape. Future regulations could introduce new challenges or risks for stablecoin operators and their affiliates. Furthermore, PayPal expressed awareness of potential reputational risks if its partner were to encounter legal issues or if PYUSD were misused in illegal activities.
Nonetheless, the SEC’s decision reflects a broader regulatory easing, which may provide a favorable environment for PayPal and other financial technology firms venturing into the stablecoin market, at least for the foreseeable future.
