PayPal is determined to strengthen its position in the world of cryptocurrencies and therefore has made it official the release of his own stablecoin. PayPal USDalso known as PYUSDwill be tied to the US dollar and will gradually begin to be offered to users of the popular payment platform.
In this way, the company makes available a product on which it had been working for more than a year. Let’s not forget that the first reports of a PayPal stablecoin appeared in early 2022. However, the crypto winter—powered by the UST disaster and the FTX scandal—seemed to have slowed its development.
In fact, PayPal’s intention was to launch the stable cryptocurrency in the first months of this year. But plans changed when the New York Department of Financial Services ordered Paxos to suspend issuance of Binance’s stablecoin BUSD, under threat of being sued by the United States Securities and Exchange Commission (SEC) if it did not comply with the order.
The change in PayPal USD’s launch strategy was due to the fact that the partner in charge of its development is, precisely, Paxos. Faced with strong scrutiny over the crypto ecosystem, the payment platform opted for step on the brake and postpone the debut of his own stablecoin. However, now that the dust has settled, PayPal has been able to make the long-awaited announcement and expand its presence in the digital asset segment.
PayPal USD (PYUSD), PayPal’s stablecoin
According to PayPal, its stablecoin developed by Paxos It is backed by dollar deposits, short-term Treasury bonds, and other cash equivalents..
It is worth noting that, like the rest of the transactions linked to cryptocurrencies on the platform, PayPal USD will be available only in the United States. It is still unknown if the company plans to expand its crypto offer to its users outside of that country. Although it seems unlikely, at least for now, due to regulatory issues.
The PayPal stablecoin is a token CKD-20. This means that, like many other stablecoins, it runs on the Ethereum network. According to the company, the idea is that PYUSD becomes “a bridge between fiat money and the web3 for consumers, merchants and developers.”
Users will have the ability to transfer PayPal USD to and from external cryptocurrency wallets, as well as make payments to other users directly from the PayPal app. They will also have the ability to exchange the stablecoin for any of the other cryptocurrencies offered on the platform —and vice versa—, or use their PYUSD balance to pay for purchases. It is expected that, in the not too distant future, PayPal will allow transfers with the stablecoin to and from Venmoyour digital wallet.
“The shift to digital currencies requires a stable instrument that is digital native and easily connects to a fiat currency like the US dollar. Our commitment to responsible innovation and compliance, and our track record of delivering new experiences to our customers, provides the foundation needed to help grow digital payments through PayPal USD.”
Dan Schulman, President and CEO of PayPal.
Regarding transparency, PayPal reported that Paxos will publish monthly reports on the composition of its stablecoin reserves. They will be released from September. Meanwhile, third-party audits will be released on the value of the assets used to maintain the 1:1 peg between PYUSD and the US dollar.