PayPal, a prominent global payments company, is making its debut in the cryptocurrency realm by introducing its own stablecoin named PayPal USD (PYUSD). The stablecoin is pegged to the U.S. dollar and built on the Ethereum blockchain. This groundbreaking move marks the first instance of a major financial institution issuing its proprietary stablecoin. In the near future, PayPal users within the United States will gain access to PYUSD. This innovative token offers the flexibility for seamless transfers between PayPal accounts and external digital wallets. It can be employed for transactions, purchasing goods and services, and conversion to and from other cryptocurrencies supported by PayPal.
PayPal has revealed plans to make its stablecoin, PYUSD, accessible to a thriving community of external developers, wallets, and web3 applications. The coin's integration with crypto exchanges is also expected to be seamless. New York's Paxos Trust, a crypto financial-services firm, will issue PYUSD, which will be backed by U.S. dollar deposits, short-term Treasuries, and similar cash equivalents. The stablecoin holds the flexibility of being redeemed for dollars and exchanged for other cryptocurrencies within PayPal’s network, including bitcoin (BTC), bitcoin cash (BCH), ether (ETH), and litecoin (LTC).
The development of PayPal's stablecoin encountered a temporary pause in February due to regulatory scrutiny. Addressing the importance of stable instruments for the digital currency landscape, PayPal's CEO Dan Schulman emphasized the need for a digital-native asset closely linked to fiat currency like the U.S. dollar. The company's commitment to responsible innovation and regulatory compliance positions PayPal to contribute significantly to the advancement of digital payments through the introduction of PayPal USD.
Initially, PYUSD will be accessible through PayPal, followed by its widely-used Venmo application.
In a bid to alleviate concerns regarding unbacked tokens, PayPal has taken steps to enhance transparency. Starting September 2023, Paxos will generate a monthly Reserve Report for PayPal USD, detailing the composition of the reserves. Moreover, Paxos will commission an independent third-party accounting firm to conduct a public attestation of the value of PayPal USD reserve assets. This attestation will adhere to the attestation standards set by the American Institute of Certified Public Accountants, reinforcing the commitment to accountability and reliability.
Malwa, S. (2023) PayPal to issue dollar-pegged crypto Stablecoin based on Ethereum, CoinDesk Latest Headlines RSS. Available at: https://www.coindesk.com/business/2023/08/07/paypal-to-issue-dollar-pegged-crypto-stablecoin-bloomberg/ (Accessed: 08 August 2023).