Nikolas Sargeant
PayPal disclosed in a Tuesday filing that the U.S. Securities and Exchange Commission has terminated its investigation into PYUSD, the company's dollar-pegged stablecoin, without taking enforcement action.
The payments giant revealed that the SEC's Division of Enforcement had issued a subpoena in November 2023 requesting documentation related to PYUSD, but informed the company in February 2025 that the inquiry had been closed with no further action planned.
Trump Administration Reverses Crypto Enforcement Agenda
This development continues a pattern of regulatory pullback since President Trump took office in January 2025. The SEC has systematically withdrawn or suspended investigations and lawsuits targeting major cryptocurrency companies, including Gemini, Coinbase, Ripple Labs, and Uniswap Labs.
High-profile cases against industry figures like Justin Sun and Hex founder Richard Heart have similarly been shelved as part of the administration's broader policy shift toward reduced oversight of digital asset businesses.
The regulatory retreat aligns with Trump's campaign promises to create a more favorable environment for cryptocurrency innovation and adoption within the United States financial system.
PayPal's Stablecoin Strategy Gains Regulatory Clarity
PayPal launched PYUSD in August 2023 through a partnership with Paxos Trust Company, a regulated financial institution. The stablecoin, which maintains a 1:1 backing with U.S. dollars, is available to American users across both PayPal and Venmo platforms and supports transfers to external wallets subject to compliance verification.
While PYUSD briefly surpassed $1 billion in market capitalization, demonstrating significant initial demand, its valuation has since decreased. However, the SEC's decision to terminate its investigation could restore confidence among institutional partners and retail users in a sector where regulatory certainty has been scarce.
The stablecoin market continues operating without comprehensive federal legislation, though Congress remains engaged in ongoing discussions about potential frameworks that could formalize how such assets are issued and regulated.
Regulatory Relief Comes With Lingering Uncertainty
Despite this favorable development, PayPal acknowledged in its filing that the regulatory landscape remains dynamic. The company noted that future legislation could introduce new compliance requirements or operational risks for stablecoin issuers and their partners.
PayPal also highlighted potential reputational concerns should its issuing partner encounter legal difficulties or if PYUSD becomes associated with illicit transactions.
Nevertheless, the SEC's decision to drop its investigation represents significant regulatory relief for PayPal and joins a growing list of enforcement rollbacks benefiting the cryptocurrency sector. For financial technology companies exploring stablecoin offerings, this signals a meaningful reduction in regulatory pressure under the current administration.
