PayPal Announces SEC Closure of PYUSD Investigation
PayPal has revealed that the Securities and Exchange Commission (SEC) has concluded its investigation into the company’s dollar-pegged stablecoin, PayPal USD (PYUSD). This development sheds light on the SEC’s current perspective regarding stablecoins. With PYUSD at the forefront, PayPal is eager to expand its presence within the cryptocurrency market.
Under the leadership of Gary Gensler, the SEC had initiated numerous enforcement actions and investigations related to cryptocurrencies, claiming that the majority of them were unregistered securities. However, in the aftermath of Gensler’s exit, the SEC has suspended or terminated several cryptocurrency-related actions, indicating a broader pro-cryptocurrency approach under the Trump administration.
In a recent regulatory filing, PayPal disclosed that the SEC has officially closed its investigation into PYUSD without taking any enforcement action. The inquiry began in November 2023 when the SEC issued a subpoena for documents related to PYUSD, but specific details about the requested documents were not disclosed.
The SEC’s decision to terminate the PYUSD investigation further reflects its evolving stance on stablecoins. In an April 4 announcement, the SEC’s Division of Corporation Finance clarified that fully backed dollar-pegged stablecoins intended for payment purposes, rather than for generating interest or yield, would not be classified as securities.
This development represents a significant boost for PayPal as it aims to strengthen its foothold in the cryptocurrency sector through PYUSD. During the company’s recent earnings call, CEO Alex Chriss emphasized the firm’s commitment to swiftly delivering the advantages of cryptocurrency and stablecoins to both customers and the broader industry.
To enhance its offerings, PayPal recently introduced a loyalty program for U.S. customers holding PYUSD in their PayPal and Venmo wallets, providing an annual rewards rate of 3.7%. Additionally, PayPal has formed a partnership with Coinbase, the leading U.S. cryptocurrency exchange by trading volume, to accelerate the adoption of PYUSD. This collaboration enables Coinbase users to trade PYUSD without incurring fees and to convert their PYUSD into U.S. dollars on the platform.
Beyond these incentives, PayPal is also investigating opportunities for payments and decentralized finance involving PYUSD in conjunction with Coinbase. During the earnings call, Chriss highlighted the company’s initiatives to expand the use of digital currencies for common transactions, such as international money transfers and purchases.
As PayPal intensifies its focus on PYUSD, the impending implementation of stablecoin regulations in the U.S. may further legitimize major players in the cryptocurrency market. Reports suggest that lawmakers are expected to vote on at least one regulatory bill before Memorial Day. Currently, PYUSD’s market capitalization stands at approximately $887.5 million, which is significantly lower than leading stablecoins like USDT and USDC, whose market caps are $142.4 billion and $61.7 billion, respectively.
