PayPal Launches Its Own Stablecoin PYUSD

The American fintech company PayPal launched a new stablecoin called PayPal USD (PYUSD) on Monday, August 7th.

The stablecoin pegged to the US dollar will be issued by Paxos Trust Co. and will be fully backed by deposits in US dollars, short-term government bonds, and similar cash equivalents. It is built on the ethereum blockchain and ‘designed for digital payments and Web3’, with the company stating that it will soon be available to users in the US.

PYUSD will be exchangeable at any time for US dollars, other cryptocurrencies on PayPal, and will be transferable between PayPal and Venmo. The company claims that the stablecoin will soon be available as a payment method for various purchases.

By launching the stablecoin, PayPal could accelerate its efforts to become a ‘giant’ in crypto payments, an initiative the company started in 2020 after paving the way for crypto payments on its platform.

PayPal boasts over 350 million active users and already allows users in the US and the UK to buy, sell, and hold bitcoin, ether, bitcoin cash, and litecoin, while also enabling payments in the aforementioned cryptocurrencies.

PayPal’s CEO Dan Schulman hopes that the new stablecoin will become part of the overall payment infrastructure. The company first confirmed its plan to launch a crypto stablecoin in January 2022, stating that it would work closely with relevant regulators.

Although there are several stablecoins available in the crypto market, PayPal will be the first ‘major player’ to launch its own project.

– By launching the first stablecoin from a leading financial institution, PayPal and Paxos demonstrate the real value of blockchain technology. PayPal USD is the most significant leap forward for digital assets and the financial industry, and Paxos proudly enables this transformative product – stated Paxos CEO Charles Cascarilla.

Paxos has claimed that the regulatory environment around stablecoins in the US is gradually progressing towards greater clarity, thus there is demand for alternative stablecoins beyond what is currently available in the market.

The stablecoin market has a circulating supply of $126 billion, dominated by USDT, which has a market capitalization of $86,5 billion, followed by USDC with a market capitalization of $26 billion and several others. However, many stablecoins have recently faced regulatory hurdles in the US, where policymakers are currently discussing a bipartisan stablecoin bill.