PayPal stablecoin registers 200% growth as top player faces regulatory pressure

Core Insights - PayPal USD (PYUSD) has experienced a remarkable 216% growth in circulation and on-chain usage within 90 days, reflecting a significant shift in sentiment towards stablecoin issuers [1] - As of September 2025, PYUSD's market capitalization surged from $1.28 billion to $3.8 billion, more than tripling its supply in circulation [2] - The growth of PYUSD is largely attributed to PayPal's expansion to Solana and Arbitrum, enhancing cross-chain transfers and liquidity in decentralized finance platforms [3] Company Developments - Launched on August 7, 2023, PayPal USD is a fully backed, Ethereum-based stablecoin issued by Paxos, marking PayPal as the first major U.S. financial firm to introduce a dollar-backed digital asset [4] - The introduction of a new peer-to-peer feature called "links" allows users to send funds via a one-time, sharable link, facilitating easier movement of stablecoins across platforms [5] - PYUSD's integration into major exchanges like KuCoin and its presence in Venmo's P2P system have significantly contributed to its rising usage in both retail payment flows and crypto transactions [5] Industry Context - The rapid growth of PYUSD contrasts with the challenges faced by Tether (USDT), the largest stablecoin by market capitalization, which is currently under pressure regarding transparency [6]