The US Securities and Exchange Commission has dropped its investigation into the PayPal dollar-backed stablecoin, PYUSD, without taking enforcement action.
PayPal disclosed the decision in a Tuesday filing, marking another high-profile crypto probe closed under President Donald Trump’s administration.
It said that the SEC’s Division of Enforcement had issued a subpoena in Nov. 2023, requesting documents related to PYUSD. The company said that in Feb. 2025, the SEC informed them that the inquiry had been closed with no further action.
Trump-Era SEC Scales Back Crackdown On Digital Assets
The move comes as part of a broader shift at the SEC. Since Trump took office in Jan. 2025, the agency has scaled back its regulatory crackdown on digital asset firms.
It has dropped or paused investigations and lawsuits against several major crypto companies, including Gemini, Coinbase, Ripple Labs and Uniswap Labs, among others.
Enforcement actions against high-profile individuals such as Justin Sun and Hex founder Richard Heart have also been shelved.
PayPal Gains Breathing Room As Regulatory Pressure Eases
PayPal launched PYUSD in Aug. 2023 in partnership with Paxos Trust Company, a US-regulated entity. The stablecoin, backed 1:1 by the US dollar, is available to US users on PayPal and Venmo and can be transferred to external wallets, subject to compliance checks.
PYUSD has earlier surpassed $1b in market cap, signaling strong demand and growing traction within the digital payments ecosystem, though its valuation has since declined.
The closure of the SEC’s inquiry could boost confidence among institutional partners and retail users, especially as stablecoins remain under close global scrutiny. While no comprehensive US regulation currently governs stablecoins, Congress continues to debate a legal framework that could reshape how such assets are issued and used.
SEC Exit Offers Relief, But Uncertainty Still Shadows PYUSD
PayPal noted that the regulatory environment remains fluid. As a result, future legislation could bring new costs or risks for stablecoin issuers and partners. Additionally, the company acknowledged potential reputational harm. This could occur if its issuer partner faces legal trouble or if PYUSD is used in illicit transactions.
Even so, the SEC’s decision to abandon its investigation adds to a growing list of crypto enforcement rollbacks. This trend reflects a broader shift toward lighter regulatory oversight. For PayPal and other fintech firms moving into stablecoins, it suggests that regulatory headwinds may be easing, at least for now.
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