SEC Ends Probe Into PayPal’s Stablecoin PYUSD, Marking Regulatory Milestone
The U.S. Securities and Exchange Commission has officially closed its investigation into PayPal's dollar-backed stablecoin PYUSD without taking enforcement action, in a move that's being welcomed across the crypto and fintech sectors.
In a regulatory filing dated April 29, PayPal revealed that the SEC’s Enforcement Division informed the company it “does not intend to recommend an enforcement action” against PayPal regarding its U.S. dollar-pegged stablecoin, PYUSD. The notice signals a clean break for the fintech giant and paves the way for greater clarity around stablecoins issued by traditional finance players.
The SEC initially launched the probe in November 2023, shortly after PayPal became the first major U.S. financial firm to roll out its own stablecoin. At the time, the SEC’s scrutiny highlighted growing concerns about how stablecoins could be classified under securities law. However, this recent development marks a pivotal shift in tone.
Launched in August 2023, PYUSD is fully backed by U.S. dollar deposits, short-term Treasurys, and similar cash equivalents, and is issued by Paxos Trust Company. It was created to offer seamless payment experiences in digital commerce and Web3 environments. Despite initial skepticism from lawmakers and regulators, PYUSD has slowly gained traction in select crypto exchanges and platforms.
The decision to drop the investigation is a positive signal not just for PayPal, but for the broader crypto and stablecoin landscape in the U.S., where regulatory uncertainty has long stifled innovation. Industry insiders see it as a green light for other fintechs and TradFi institutions exploring blockchain-based payment solutions.
While PayPal and Paxos have not issued detailed statements yet, analysts say this development could boost institutional confidence in building stablecoin infrastructure — particularly in markets where fiat on-chain settlement is gaining interest.
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Author
Surabh Yadav
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