Paypal Debuts a Dollar-Backed Stablecoin
- PayPal’s shares rose by 1% following today’s annoucement.
- The payment provider currently allows US and UK customers to buy, sell, and hold supported cryptocurrencies.
- Stablecoins are digital assets whose prices are pegged to the value of real-world assets such as the US dollar.
Global payment provider has announced the launch of its own stablecoin that will be pegged to the US dollar. The company shared the news on Monday, August 7, noting that the Paypal USD (PYUSD) will be issued by Paxos Trust Co. and will become a part of its payment infrastructure.
PayPal also noted that the PYUSD is backed by short-term treasuries, dollar deposits, and cash equivalents. The company added that its new stablecoin will be released as an ERC-20 token on the Ethereum network.
PayPal’s foray into the stablecoin market marks the first time a financial company of its status has released its own stablecoin. The new stablecoin will soon be accessible to PayPal users in the United States. PayPal announced that its new stablecoin has an “already large and growing community of external developers, wallets, and web3 applications” and can be used by crypto exchanges.
Also, an official announcement noted that users can transfer PYUSD between PayPal and other supported wallets, convert supported cryptocurrencies to and from PYUSD, and fund the purchase of products and services.
PayPal added that launching a stablecoin is part of its plans to lower transaction costs for new users making payments in digital spaces and to enable direct developer payments.
Dan Schulman, president and CEO of PayPal, remarked that “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.”
Schulman said in a press release
Our commitment to responsible innovation and compliance and our track record of delivering new experiences to our customers provide the foundation necessary to contribute to the growth of digital payments through PayPal USD.
PayPal will Strengthen its Crypto Ambitions with this Launch
PayPal introduced a cryptocurrency checkout service for retailers in March 2021, enabling customers to pay with cryptocurrency. It later stepped up its cryptocurrency campaign with third-party integrations that let users purchase Bitcoin on the platform and send it anywhere.
PayPal’s launch of its own stablecoin could expand its presence in the crypto space. The payment company has over 350 million active users and, as previously mentioned, supports both US and UK customers to buy, sell, and hold cryptocurrencies such as Litecoin, Bitcoin, and Ether.
PayPal’s new stablecoin has already received massive reactions. Rep. Patrick McHenry, chair of the House Financial Services Committee, remarked that today’s announcement “is a clear signal that stablecoins—if issued under a clear regulatory framework—hold promise as a pillar of our 21st century payments system.”
Paxos CEO Charles Cascarilla also said in a statement,
With the launch of the first stablecoin by a leading financial institution, PayPal and Paxos are proving the real-world value of blockchain technology. PayPal USD is the most significant leap forward for digital assets and the financial industry, and Paxos is proud to enable this transformative product.
Additionally, PayPal stated that beginning next month, Paxos will make monthly reserve reports for PayPal USD available to the public, clarifying the assets that make up the stablecoin’s reserves.
Paxos will also be involved in publishing open, independent confirmations of the value of PayPal USD reserve assets. An independent third-party accounting firm will issue this attestation, and it will be made in compliance with the requirements for attestation established by the American Institute of Certified Public Accountants (AICPA).
Lawrence has covered some exciting stories in his career as a journalist, he finds blockchain-related stories very intriguing. He believes Web3 will change the world and wants everyone to be a part of it.
