PayPal’s PYUSD Stablecoin Grows to $3.8B Amid LayerZero Expansion and Yield Regulation Questions

• PYUSD supply grew 113% in November 2025, with transactions rising 150% to 1.8 million.

• Integration with LayerZero enabled expansion to nine blockchains, enhancing accessibility for over 400 million users.

• The stablecoin’s 3.7% yield has sparked regulatory concerns under the GENIUS Act, which bans yield-bearing options.

Discover how PayPal’s PYUSD stablecoin has doubled its market cap to $3.8 billion amid blockchain expansions and regulatory hurdles. Explore growth drivers and market implications for crypto investors today.

What is driving the rapid growth of PayPal’s PYUSD stablecoin?

PayPal’s PYUSD stablecoin has seen explosive expansion, with its market capitalization climbing from approximately $1.2 billion in September 2025 to around $3.8 billion by the end of Q4, according to on-chain data from DeFiLlama. This surge follows a 113% increase in supply during November, coupled with a 150% uptick in transactions reaching 1.8 million. Key factors include strategic integrations and PayPal’s vast user network, which have accelerated adoption despite the stablecoin’s relative youth compared to established players like USDT and USDC.

How has LayerZero integration impacted PYUSD’s multichain presence?

The integration with LayerZero in September 2025 has been pivotal for PYUSD stablecoin, allowing it to bridge across nine additional blockchains such as Abstract, Aptos, Avalanche, Ink, Sei, Stable, and Tron, along with enhanced versions on Berachain and Flow. This move has provided direct access to PayPal and Venmo’s combined user base of over 400 million active accounts, facilitating seamless transfers between traditional and decentralized finance ecosystems. On-chain metrics from DeFiLlama indicate that PYUSD’s supply doubled in Q4, underscoring the effectiveness of this multichain approach in capturing new liquidity pools and user engagement. Experts in blockchain interoperability note that such expansions reduce fragmentation in the stablecoin market, enabling PYUSD to compete more robustly by offering lower-cost, faster cross-chain transactions. As a result, transaction volumes have spiked, reflecting growing trust in PayPal’s infrastructure for crypto activities. This strategic shift not only bolsters PYUSD’s utility but also highlights PayPal’s edge in onboarding mainstream users to Web3 applications without the complexities of multiple wallets or exchanges.

Frequently Asked Questions

What regulatory challenges does PYUSD face under the GENIUS Act?

The GENIUS Act, enacted in July 2025, prohibits yield-bearing stablecoins to ensure compliance and maintain stability, directly conflicting with PYUSD’s 3.7% annual yield on balances. PayPal, regulated by the New York Department of Financial Services, has yet to address how it plans to reconcile this, raising questions about potential adjustments to its model. Issuers must adhere to 1:1 reserves and operate as approved institutions, per the Act’s guidelines.

How does PYUSD compare to leading stablecoins like USDT and USDC?

PYUSD trails Tether’s USDT, which holds a $184.6 billion market cap, and Circle’s USDC at $77.3 billion, together dominating over 85% of the $307.2 billion stablecoin market as of late 2025. While PYUSD’s growth to $3.8 billion marks it as a rising contender, its supply is mostly Ethereum-based, unlike the broader multichain presence of competitors. This positions PYUSD for steady but targeted expansion through PayPal’s payment ecosystem.

Key Takeaways

• Impressive Supply Surge: PYUSD’s 113% supply growth in November 2025, reaching $3.8 billion, demonstrates the power of PayPal’s user network in driving stablecoin adoption.
• Multichain Expansion Benefits: LayerZero integration has unlocked access across nine blockchains, boosting transactions by 150% and bridging TradFi with DeFi seamlessly.
• Regulatory Navigation Needed: The 3.7% yield conflicts with the GENIUS Act’s restrictions, urging PayPal to clarify compliance strategies for sustained growth.

Conclusion

PayPal’s PYUSD stablecoin continues to redefine stablecoin dynamics through its rapid market cap expansion to $3.8 billion and innovative LayerZero integrations, solidifying its role in blending traditional payments with blockchain technology. Despite regulatory scrutiny from the GENIUS Act regarding its yield features, PYUSD’s trajectory highlights PayPal’s competitive strengths in the evolving crypto landscape. As the stablecoin market grows at a modest 0.8% weekly pace, investors should monitor upcoming clarifications from PayPal to gauge long-term viability and potential for further mainstream integration.

PayPal’s PYUSD stablecoin has surged from as low as $1.2 billion in September to roughly $3.8 billion in market cap so far based on on-chain data. The growth marks one of the fastest increases following a significant increase in its supply in Q3. 

PYUSD supply increased by roughly 113% in November, alongside a 150% rise in transactions to 1.8 million. Despite PYUSD being relatively new compared to Tether’s USDT and Circle’s USDC, the stablecoin marked as the second fastest growing stablecoin in Q3 2025 behind Ethena’s USDe, which recorded 173% growth over the same period. The increase was primarily attributed to PayPal’s extensive network. 

LayerZero integration pushes PYUSD supply growth

PayPal integrated with LayerZero in September, which helped expand PYUSD to nine additional blockchains, including Abstract, Aptos, Avalanche, Ink, Sei, Stable, and Tron, and upgraded versions on Berachain and Flow. The expansion enabled direct access to over 400 million active users across PayPal and Venmo for PYUSD. PYUSD supply increased from roughly $1.2 billion to approximately $3.8 billion in Q4, based on DeFiLlama on-chain data. 

The LayerZero integration in September provided PYUSD with the opportunity to expand its presence across multiple chains rapidly. The multichain strategy also allowed PYUSD to operate as a bridge between traditional finance and decentralized finance applications. 

PayPal’s distribution network has enabled PYUSD to achieve the current adoption. The growth in volume and token supply underscored PayPal’s competitive advantage in onboarding users who have already established trust in the platform for payments and digital finance. 

So far, the stablecoin market cap has remained at $307.2 billion, with an average weekly growth of 0.8% based on on-chain data. Tether USDT remains the dominant stablecoin, with a market cap of $184.6 billion, representing more than half of the total stablecoin supply. Circle’s USDC accounts for roughly $77.3 billion, coming in as the second-largest stablecoin issuer. The two stablecoins control over 85% of the stablecoin market share, with most of the supply concentrated on the Ethereum chain.

PYUSD’s 3.7% yield raises concerns of contradiction with the GENIUS Act

PYUSD’s 3.7% annual yield on balances has, however, attracted attention following its contradiction of the GENIUS Act. The GENIUS Act prohibits yield-bearing stablecoins for compliance purposes. So far, PayPal has not clarified how it will address the current concern with federal regulations, leaving open questions about the legality and future of the stablecoin. Currently, PayPal operates under the New York DFS regulations. 

The GENIUS Act was signed into law in July and has helped in shaping the stablecoin market this year. According to the Act, issuers are limited to insured depository institutions, bank subsidiaries, and approved non-bank financial institutions. The GENIUS Act requires a 1:1 reserve for all stablecoins and restricts any form of yield or interest to holders. 

PayPal is one of the top payment options for online consumers who make purchases online. PYUSD stablecoin is presently helping the firm retain its lead and boost its customer engagement. 

PayPal stock has recorded a negative YTD this year, reflecting a tough market for the payment service provider. The YTD stood at -26.30% at the time of publication, with the stock trading at $62.90 on Nasdaq. 

Across the broader cryptocurrency market, Bitcoin and Ethereum tokens have rebounded from last week’s lower lows, posting a roughly 7% increase over the past 24 hours. BTC was trading at $92,878 at the time of publication, alongside ETH, which was trading at $3,052.