PayPal USD
PYUSD#36PYUSD is PayPal's US dollar stablecoin, issued by Paxos and backed by dollar deposits and Treasuries.
- Market cap
- $2.71B
- Volume 24h
- $27.41M
- All-time high
- $1.02
- −2.06% from ATH
- Circulating supply
- 2.76B
Does not clear all 8 Shariah criteria. Needs caution: interest (riba), nature of the asset, and usage. Fails: business model.
- 4 pass
- 3 caution
- 1 fail
Verdict history
- DoubtfulCurrent
First publication
Fundamentals, market picture and news will appear here.
Halal analysis
Can a Muslim hold PayPal USD?8 Shariah criteria
4 pass · 3 caution · 1 failThe token pays no interest, but PayPal offers an opt-in 4% a year on PYUSD balances held in PayPal, which works like interest on money.
Riba means interest, or any fixed increase on a loan or on an exchange of money. PYUSD is redeemable 1:1 for dollars, and the reserve income stays with the issuer, Paxos. In that sense the token is like USDT: holding it on-chain earns nothing. The difference is PayPal. PayPal advertises '4% rewards' a year on PYUSD held in a PayPal account for users who opt in and hold at least 1 PYUSD. Under PayPal's crypto terms it is PayPal's own rewards programme: it accrues daily on the average balance, is credited monthly in PYUSD, and PayPal sets the rate at its sole discretion.
It is paid by PayPal as the distributor, not by the token; PayPal does not say how it funds it. Whatever the label, a percentage return on a balance of a dollar token is treated as interest. It is not rated fail, because the reward is optional: a holder can opt out, or keep PYUSD in their own wallet, and the token then carries no interest. It is not a pass either, because the reward is the main channel through which PayPal promotes holding PYUSD. Malaysia's SC Shariah Advisory Council classes currency-backed digital currencies as currency, which makes currency-exchange rules apply (spot and equal amounts). Applying that to PYUSD is Liberandum's reading.
PYUSD is a redeemable claim on dollar reserves at an issuer with conditional OCC approval to become a national trust bank, but authorities disagree on whether crypto tokens count as property (mal).
Each PYUSD can be redeemed 1:1 for US dollars. PayPal says it is fully backed by dollar deposits, US Treasuries and similar cash equivalents. The issuer, Paxos Trust Company, won conditional OCC approval in December 2025 to convert from New York's financial regulator to a national trust bank supervised by the US Office of the Comptroller of the Currency; Paxos said it would complete the conversion imminently, but completion was not independently confirmed. The claim is on the issuer, not ownership of the reserve assets. ShariaQuant sees this as the main source of doubt.
On property (mal), Malaysia's SC Shariah Advisory Council recognises digital currencies as mal and classes currency-backed ones as currency, within the SC's jurisdiction; applying this to PYUSD is Liberandum's reading. A 2026 Darul Uloom Karachi fatwa says crypto tokens are not mal. State fatwa bodies in Egypt, the UAE, Indonesia and Turkey rejected cryptocurrency in general. Because recognised bodies disagree, this criterion is caution. Its score is a little higher than USDT's because the issuer is more tightly regulated and the reserves are simpler.
PYUSD is built to stay at US$1 and is used for payments, not bets on price.
Maysir means gambling, or gains that depend purely on chance; ordinary price movement is not maysir. PYUSD traded at about US$0.9999 on 27 September 2026, and its lowest recorded price was about US$0.96 in December 2024. Nobody buys it to profit from price swings. PayPal launched it for payments and transfers. Daily trading volume of about US$23 million is small next to its US$2.78B supply, which suggests it is mostly held and moved rather than traded.
The reserves are dollar deposits, Treasuries and cash equivalents, so the issuer's income from PYUSD is essentially interest, far above the 5% limit.
This criterion looks at how the company behind a token earns. If 5% or more of its income comes from clearly impermissible sources such as interest, the criterion fails. PayPal describes the reserves as US dollar deposits, US Treasuries and similar cash equivalents. Sharlife's review also notes Treasury-collateralised reverse repurchase agreements. All of these earn interest, and a stablecoin issuer that pays holders nothing earns mainly from that interest. Neither Paxos nor PayPal publishes how the income is split between them, but on any split the interest share is far above 5%.
CryptoUmmah makes the same point: the business is sustained by interest even though holders do not receive it. The counter-view is serious. Sharlife says holders own the dollar value, not the interest-bearing instruments, and rates PYUSD permissible. A fail here lowers the score but does not decide the verdict alone.
Reserves are simple and checked monthly by KPMG under federal supervision, though the issuer controls supply and a 2025 minting error showed the risk.
Gharar means excessive uncertainty or lack of transparency in a deal. The reserves are in plain instruments (deposits, Treasuries, cash equivalents), with no gold, bitcoin or undisclosed loans. Paxos publishes a monthly reserve report and a monthly attestation by KPMG. Since December 2025 the issuer has held conditional OCC approval to become a national trust bank, which Paxos said it would complete imminently, though completion was not independently confirmed.
The weak points: an attestation checks a point in time and is not a full audit, and Paxos controls minting and, as ShariaQuant notes, can freeze balances. On 15 October 2025 a Paxos wallet minted 300 trillion PYUSD by mistake, and Paxos burned it within about 30 minutes. Aave briefly froze PYUSD markets. The error was visible on-chain and quickly reversed, so it is not undisclosed minting, but it keeps this criterion at a low pass.
PYUSD is used for payments and transfers, but a visible share sits in interest-bearing lending and in PayPal's rewards programme.
PYUSD's intended use, paying and sending dollars, is permissible in itself. Part of the supply, though, is used in ways that earn interest. On 27 September 2026 DefiLlama listed PYUSD lending pools worth over US$200M, led by a Sentora-curated vault on Solana, SparkLend on Ethereum and Kamino Lend. That is several percent of the US$2.78B supply. PayPal's 4% rewards encourage users to park PYUSD in PayPal for a return. No source shows how much of the supply is enrolled in rewards. With a notable share of disputed use and no measure of the rest, this criterion is caution.
PYUSD can be bought outright and held in full, in PayPal or in a self-custody wallet.
This criterion asks only whether the token can be owned in a normal, fully paid way. US PayPal users can buy PYUSD 1:1 for dollars and redeem it the same way. It can be withdrawn to self-custody wallets on Ethereum, Solana and other networks, and it trades on the spot market. It does not exist only as a leveraged or derivative product. Holding it in PayPal is fully paid ownership too. Opting into the rewards programme is a separate choice, covered under yield products.
PYUSD brings regulated digital dollars to a large payments network; no evidence of dominant harm was found.
Maslahah means weighing public benefit against harm. The benefit is fast, cheap dollar transfers from a regulated issuer, reachable from PayPal accounts and ordinary crypto wallets. On harm, no source was found that ties PYUSD to a notable share of scam or sanctions-evasion flows, unlike the largest offshore stablecoins. PYUSD is issued by a supervised US trust company, conditionally approved by the OCC to become a national trust bank, that can act on law-enforcement requests. The main downside is indirect: the rewards and lending uses discussed above draw holders towards interest.
That weighs on the interest and usage criteria rather than here.
How you can use it
Tap a card for the ruling and sourcesBuying PYUSD outright and holding it, in PayPal without opting into rewards or in your own wallet, is acceptable for an asset rated DOUBTFUL. If PYUSD is treated as money, exchange it on the spot and at equal value when swapping for dollars.
Not available: no exchange-traded fund holding PYUSD was found. A fund that held it would be judged like spot, and its structure would need checking separately (no interest income, no lending).
Payments are what PYUSD was built for, inside PayPal and on-chain. Indonesia's MUI (tier 1) holds that using cryptocurrency as currency is haram, so paying with it is caution.
Not available natively: PYUSD is not a proof-of-stake coin, so there is no validation work to be paid for. Products marketed as 'PYUSD staking' pay returns from lending or rewards, covered under lending and yield.
Always fail: borrowing to trade with leverage, without full delivery.
Always fail: futures, perpetuals and options are deferred exchanges without delivery, with leverage.
Lending PYUSD for a return is interest on a loan of money (riba). On 27 September 2026 lending pools on Kamino and a Sentora-curated vault on Solana paid roughly 3.4–3.9% a year, and SparkLend on Ethereum about 1.5%.
PayPal's opt-in rewards programme pays an advertised 4% a year on the average PYUSD balance held in PayPal, at a rate PayPal sets; the token itself pays nothing. That is a percentage return on a money balance, which is treated as interest whatever it is called. Opt out, or keep PYUSD outside PayPal, to avoid it. DeFi 'earn' products on PYUSD are lending.
Scholars quotes
Penggunaan cryptocurrency sebagai mata uang hukumnya haram, karena mengandung gharar (ketidakjelasan), dharar (bahaya) dan bertentangan dengan Undang-Undang nomor 7 tahun 2011 tentang Mata Uang dan Peraturan Bank Indonesia nomor 17 tahun 2015 tentang Kewajiban Penggunaan Rupiah di Wilayah Negara Kesatuan Republik Indonesia.Sebagaimana mata wang yang lain, mata wang digital hendaklah tidak digunakan sebagai bayaran kepada barangan, perkhidmatan dan aktiviti tidak patuh Syariah seperti pembelian dadah, pelacuran, perjudian dan pendanaan aktiviti keganasan serta penggubahan wang haram.If a digital currency is backed by ribawi items comprising gold, silver and currency, it is categorised as a currency from Shariah perspective. Hence, the trading of such digital currency is subject to the principle of bai` al-sarf.Third: In light of the above and given the significant risks associated with this type of currencies and the instability of their transactions, the Council of the Academy recommends pursuing research and studies on issues affecting its ruling.Bitcoin is a digital currency that does not meet the legal and Sharia criteria that make it a currency subject to the rulings of dealing with official legal currencies recognized internationally.بناءً على ذلك: فلا يجوز شرعًا تداول عملة "البتكوين" والتعامل من خلالها بالبيعِ والشراءِ والإجارةِ وغيرها، بل يُمنع من الاشتراكِ فيها؛ لعدمِ اعتبارِها كوسيطٍ مقبولٍ للتبادلِ من الجهاتِ المخُتصَّةِ، ولِمَا تشتمل عليه من الضررِ الناشئ عن الغررِ والجهالةِ والغشِّ في مَصْرِفها ومِعْيارها وقِيمتها، فضلًا عما تؤدي إليه ممارستُها من مخاطرَ عاليةٍ على الأفراد والدول.However, simply buying and holding PYUSD receives a 'Doubtful' rating at the asset qualification layer.According to research and opinion of experts so far, cryptocurrency is not considered ‘ maal ’ (wealth) in Sharia.Muhammadiyah memandang transaksi dan investasi kripto pada dasarnya mubah (boleh) tetapi dengan syarat tertentu.The opinion on this is the same as doing the same with any halal assets such as shares – 1) is permissible, 2) is more debatable and there are differing opinions on short-term trading.PYUSD can be used by Muslims for transactions and as a store of value, provided it is used in accordance with Shariah principles and not for speculative purposes.Our current position is 'tawaquf'; we can't say it is halal or haram, but we say it is better not to engage in itFiat-backed stablecoins are generally considered permissible, fully backed by the underlying currency or not, as long as this information is transparently disclosed to the users.As I mentioned at the beginning of this article it is not necessary to substantiate the permissibility of something as long as there are no prohibited factors involved in it or surrounding it.AI-assisted analysis checked against sources. Not a fatwa or investment advice.
Where it trades
8 exchanges from our coverage · no referral links
KrakenCentralized · PYUSD/USDVolume 24h$83.24KReliability7.4Halal productNo halal product- BBybitCentralized · PYUSD/USDTVolume 24h$1.77MReliability7.1Halal productIslamic account
- CCrypto.com ExchangeCentralized · PYUSD/USDVolume 24h$65.03KReliability7.0Halal productNo halal product
OKXCentralized · PYUSD/USDTVolume 24h$578.29KReliability6.7Halal productNo halal product
GateCentralized · PYUSD/USDTVolume 24h$397.66KReliability5.9Halal productNo halal product
BingXCentralized · PYUSD/USDTVolume 24h$159.94KReliability5.8Halal productNo halal product
KuCoinCentralized · PYUSD/USDTVolume 24h$290.63KReliability5.6Halal productNo halal product
BitgetCentralized · PYUSD/USDTVolume 24h$952.59KReliability5.0Halal productNo halal product
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Listings as of Sep 18, 2026
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