PayPal’s PYUSD Supply Drops 31% in Q2 2026

PayPal’s PYUSD stablecoin saw circulating supply decline roughly 31% in Q2 2026, falling from an all-time high near $4.2 billion in March to about $2.7–$2.8 billion by mid-June. The token maintained a $1 peg through the quarter with only basis-point deviations.

The supply contraction followed the wind-down of a high-yield rewards program and a rotation of liquidity toward larger stablecoins USDT and USDC. PYUSD had grown rapidly into March on integrations and the reward offer; by mid-June the circulating amount had returned to the $2.7–$2.9 billion range.

PYUSD is issued by Paxos Trust Company and is backed 1:1 by U.S. dollar deposits, short-term U.S. Treasuries, repurchase agreements and cash equivalents. Paxos publishes monthly reserve attestations prepared by WithumSmith+Brown, PC. Paxos operated under New York Department of Financial Services supervision and converted to federal oversight by the Office of the Comptroller of the Currency in December 2025. Monthly attestations reported that reserves matched outstanding PYUSD at each reporting date. The reserve mix does not include Bitcoin or corporate bonds.

On-chain distribution covered 17 blockchains in Q2. Ethereum held about 73% of PYUSD’s supply by balance, while PayPal designated Solana as the default payment network in February 2026. PYUSD represented about 6.7% of Solana’s stablecoin supply. At times during the quarter transaction volume on Solana exceeded Ethereum as lower fees increased payment activity.

PYUSD addresses on the Flow network rose more than 34% to over 82,000, where PYUSD accounted for roughly 97% of EVM-compatible stablecoins on Flow. These figures tracked increased consumer-facing use on smaller chains alongside the supply contraction.

DeFi integrations expanded in Q2. Solana lending markets including Kamino offered isolated PYUSD borrowing and lending pools with supply APYs in the range of about 4% to 9% depending on demand. Aave supported PYUSD on Ethereum. Spark allocated $150 million into Uniswap v4 pools that include PYUSD. PayPal introduced a Pay with Crypto feature for small businesses that converts accepted cryptocurrencies into PYUSD for settlements.

MoonPay, working with M0 and PayPal, launched PYUSDx on February 28, 2026. PYUSDx enables developers to issue branded, app-specific stablecoins backed 1:1 by PYUSD reserves. The first live project using the framework was USD.ai. Multiple branded tokens issued under PYUSDx may create separate liquidity pools rather than consolidating liquidity into a single PYUSD pool.

PayPal expanded PYUSD availability to 70 markets in March 2026, adding countries across Asia-Pacific, Europe and Latin America, including Colombia, Costa Rica, Peru, Uganda and Singapore. PayPal announced a corporate reorganization on April 29, 2026, that created a Payment Services and Crypto division combining Braintree merchant processing with PYUSD operations and began winding down its corporate venture arm.

Regulatory developments tracked during the quarter included the GENIUS Act standards finalized in 2026, under which PYUSD’s reserve composition and Paxos’s monthly attestations aligned with the law’s asset and transparency rules. The OCC proposed rulemaking in March 2026 raised questions about affiliate reward or yield arrangements such as PayPal’s rewards program; the public comment period closed May 1, 2026 and final guidance remained pending at quarter end.

On revenue, a simple model estimated annualized pre-cost float from reserves at about $176 million at roughly $4.1 billion of supply and a 4% Treasury yield; that revenue scope narrowed as circulating supply declined in Q2.