PayPal debuts dollar-backed stablecoin PYUSD
The stablecoin space is getting a new player in the form of fintech major PayPal, which has now introduced its very own stablecoin: PayPalUSD (PYUSD). The company claims that it is “fully backed by US dollar deposits” and can be bought or sold on PayPal’s app or website at $1.00 per PYUSD. Currently, PayPalUSD – the company’s latest addition to its suite of crypto services – is being issued by Paxos Trust Company, and is based by short-term U.S Treasuries and similar cash equivalents as well.
When it is bought or sold, users will be shown an exchange rate and any fees they may be charged for that transaction. The launch of PYUSD marks a milestone as the first stablecoin offering from a major US financial institution, and something that is likely to be lauded by crypto enthusiasts. The new stablecoin is designed to facilitate seamless payments in virtual environments and support fast transfers of value, including remittances and international payments, and it remains to be seen whether it can turbocharge the struggling crypto market.
The fallout of multiple crypto implosions last year (such as the dramatic collapse of FTX) sent the crypto industry reeling, and it has already lost trillions in market capitalization in recent times. PayPal is a known quantity in the fintech space, having an extensive user base of over 431 million across the globe and extending several financials offerings and services. It is likely that the launch of PYUSD could have a substantial impact on the crypto industry, extending its regular use beyond speculative trading. It remains to be seen whether this development can prompt other major companies to venture into the digital assets space, leading to further adoption of cryptocurrencies and the gradual recovery of the crypto market.
“The shift toward digital currencies requires a stable instrument that is both digitally native and easily connected to fiat currency like the U.S. dollar,” said Dan Schulman, President and CEO of PayPal. “Our commitment to responsible innovation and compliance, and our track record delivering new experiences to our customers, provides the foundation necessary to contribute to the growth of digital payments through PayPal USD.” To promote transparency, PayPal will publish monthly reports detailing the assets backing PYUSD starting next month. Additionally, Paxos Trust Company, which issues the stablecoin, will publish a public third-party attestation of the value of PYUSD reserve assets.
“PayPal USD is designed to reduce friction for in-experience payments in virtual environments, facilitate fast transfers of value to support friends and family, send remittances or conduct international payments, enable direct flows to developers and creators, and foster the continued expansion into digital assets by the largest brands in the world,” PayPal announced in a press release. The stablecoin is issued as an ERC-20 token on the Ethereum blockchain, making it accessible to a growing community of developers, wallets, and web3 applications.
“Most of the current volume of stablecoins is used in web3-specific environments — PayPal USD will be compatible with that ecosystem from day one and will soon be available on Venmo,” the company added. It has already rolled out a number of crypto services – so far, users in the US can buy, hold and sell cryptocurrencies, check out at online businesses using cryptocurrency, and transfer cryptos from their accounts to other wallets and exchanges.
Starting today and rolling out in the next few weeks, eligible PayPal customers in the US will be able to purchase the newly-introduced stablecoin, as well as convert any of PayPal’s supported cryptocurrencies to and from PYUSD. Furthermore, they will be able to transfer it between PayPal and compatible external wallets, as well as use it to make digital financial transactions and payments, and even fund purchases with PYUSD by selecting it at checkout, Currently, it is the only stablecoin supported within the PayPal network.
