Cryptocurrency NewsPayPal Launches PYUSD Stablecoin

PayPal Launches PYUSD Stablecoin

PayPal has entered the digital currency space by introducing its own stablecoin, known as PayPal USD (PYUSD). This move positions PayPal as a pioneer among major financial companies, as it becomes the first to launch its stablecoin. PYUSD is backed by US dollar deposits, short-term Treasuries, and similar cash equivalents, resulting from a partnership between PayPal and Paxos. The stablecoin operates on the Ethereum blockchain and is a key element of PayPal’s strategy to strengthen its presence in the digital payments landscape.

By utilizing PYUSD, PayPal aims to facilitate instant and cost-effective transfers without the need for a central intermediary. This initiative comes in response to a decline in PayPal’s share value by over 35% in the previous year, mainly due to reduced online payments following the peak of the pandemic.

While stablecoins have existed for nearly a decade, their usage has been largely limited to digital asset exchanges between traders, with minimal integration into everyday consumer payments. The total market value of stablecoins is currently over $125 billion, with Tether’s USDT being the dominant player.

PYUSD is designed to maintain a consistent exchange rate with the US dollar and can also be traded for other cryptocurrencies within PayPal’s network. Future plans include enabling transfers between PayPal and Venmo wallets, as well as interoperability with third-party wallets outside the network.

PayPal initially ventured into cryptocurrency services in 2020, allowing users to transact in various tokens, including Bitcoin (BTC), through its platform. PYUSD is expected to initially find use in the cryptocurrency and web3 sectors for trading and in-game payments, with the ultimate goal of broader adoption in areas like remittances and micropayments.

Although stablecoins offer more cost-effective and faster money transfer methods, concerns about their credibility and stability persist. Supporters argue that these digital currencies are valuable, but they are urged to anchor their value in sovereign fiat currencies to gain more trust.

The launch of PYUSD followed extensive discussions with US regulators and policymakers, and it is regulated by the NYDFS. To ensure transparency, Paxos will publish monthly reports detailing the assets backing PYUSD, accompanied by a third-party attestation by an accounting firm on the stablecoin’s reserve assets.


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