PYUSD, the stablecoin issued by PayPal, has transformed in a few months from a niche experiment into one of the fastest-growing digital assets of the year.
Its market capitalization has increased from $1.2 billion in September to about $3.8 billion currently, making the project one of the most rapidly developing among all licensed stablecoins.
The growth occurred during a period when the stablecoin market as a whole remains stable and is growing by less than 1% per week on average. Against this backdrop, PYUSD stands out as an exception, and its dynamics have become a topic of discussion among analysts and regulators.
Threefold growth in a quarter: what is driving PYUSD’s momentum
In November, PYUSD’s supply increased by 113%, and the number of transactions jumped by 150% — to 1.8 million operations. This is one of the sharpest spikes among major stablecoins in 2025.
The reasons are clear. PYUSD relies on the infrastructure of PayPal and Venmo — one of the largest payment networks in the US with an audience of over 400 million users.
In other words, PYUSD appeared in a ready-made ecosystem, rather than trying to build one from scratch. In the third quarter, PYUSD became the second fastest-growing stablecoin (173% for the period), second only to USDe from Ethena. However, PYUSD’s programmatic model is much closer to traditional payments, allowing PayPal to aggressively scale the product.
Multichain expansion via LayerZero accelerated growth
The decisive trigger was the September launch on LayerZero. Thanks to the integration, PYUSD expanded immediately to nine additional networks:
- Aptos
- Avalanche
- Sei
- Tron
- Abstract
- Ink
- Stable
- Berachain (updated network)
- Flow (updated network)
This turned PYUSD from a single-network asset into a cross-chain stablecoin with direct access to dozens of ecosystems and millions of addresses.
The multichain model allowed PayPal to take control of the Web3 payments segment, becoming a bridge for many users between traditional finance and DeFi.
The PayPal scale effect
The main advantage of PYUSD is trust. Users have been using PayPal for payments, purchases, and transfers for many years, which has lowered the entry barrier for the stablecoin.
Unlike projects that have to build an audience from scratch, PayPal immediately brought millions of ready customers, which explains the explosive growth in activity even during a period when the market is stagnating. The stablecoin market is currently estimated at $307 billion.
Two giants dominate:
- USDT — $184.6 billion
- USDC — $77.3 billion
They occupy more than 85% of the market. PYUSD is still far from these figures, but the growth rate suggests that PayPal intends to take a solid third place.
PYUSD’s 3.7% yield contradicts the GENIUS Act
And the most controversial aspect is the yield. PYUSD offers users about 3.7% annual yield on balances. But in July, the federal GENIUS Act came into force, which prohibits stablecoins from generating income for holders to eliminate operational risks and shadow banking activities.
According to the law:
- yield is prohibited
- the issuer must hold 1:1 reserves
- issuance is allowed only for banks, their subsidiaries, and approved organizations
PayPal operates under a New York (NYDFS) license. But federal requirements take precedence, and now the question arises:
how does PayPal plan to comply with the GENIUS Act if PYUSD already generates income for users? There is no answer yet.
Stablecoin grows — PayPal shares fall
Paradoxically, amid the rapid growth of PYUSD, PayPal’s shares are showing a negative result: -26.3% since the beginning of the year. Investors fear increased competition, shrinking margins, and possible tightening of regulation. Meanwhile, the industry has seen a recovery in the past 24 hours:
- Bitcoin rose to $92,878
- Ethereum — to $3,052
This could further boost PYUSD if the market continues its upward movement.
The main thing ahead: PYUSD may become the first test of the GENIUS Act
The rapid growth of PYUSD creates a new context: it took PayPal less than four months to grow the stablecoin to almost $4 billion. Now the project is becoming one of the first whose compliance with the GENIUS Act will be considered by regulators.
In the coming months, expect:
- PayPal’s comments on yield
- positions from the FDIC, Fed, and OCC
- new guidance documents for stablecoins
- potential adjustment of rules for yield operations
If PayPal finds a way to bypass the yield ban, it will set a precedent, but if not — PYUSD faces serious restructuring.
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