PayPal Launches PYUSD Stablecoin in Digital Currency
Global payment company PayPal launched crypto payments in 2020 and has been actively involved in the crypto scene since. Most recently, PayPal has launched a United States dollar-denominated stablecoin, PayPal USD (PYUSD), a fully backed, regulated stablecoin that can transform payments in Web3 and a digital native environment.
In early August 2023, PayPal announced that the US dollar-pegged stablecoin would be issued by Paxos Trust Company and fully backed by short-term Treasuries, 100% US dollar deposits and similar cash equivalents. According to the California-based payments company, it’s pegged to the dollar and will gradually be available to PayPal’s customers in the US. The Ethereum-based token is designed for digital payments and web3.
Details on the Matter
On PayPal, PYUSD will be transferable between PayPal and Venmo. It will always be redeemable for US dollars and can be exchanged for other cryptocurrencies. The company highlighted that it will soon be available as a mode of payment for various purchases. The launch of the stablecoin has started, and in the coming weeks, it will be rolled out. Eligible US PayPal customers who purchase PayPal USD will be able to transfer PayPal USD between PayPal and compatible external wallets.
Users will also be allowed to send person-to-person payments using PYUSD. Users can buy and sell PYUSD for US dollars on PayPal with no fee to buy, sell, hold or transfer PYUSD to US balance accounts. However, users can convert any of PayPal’s supported crypto to and from PayPal USD with a fee included. President and CEO of PayPal, Dan Schulman, said, “The shift toward digital currencies requires a stable instrument that is both digitally native and easily connected to fiat currency like the US dollar.” Schulman added, “Our commitment to responsible innovation and compliance, and our track record delivering new experiences to our customers, provides the foundation necessary to contribute to the growth of digital payments through PayPal USD.”
PayPal’s CEO hopes that the new stablecoin will become part of the overall payments infrastructure. There are multiple Stablecoins available in the crypto market. However, PayPal will be the first launched by a major payment processor. CEO of Paxos, Charles Cascarilla, noted, “With the launch of the first stablecoin by a leading financial institution, PayPal and Paxos are providing 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.” The firm emphasised that the regulatory environment around stablecoin in the US is gradually progressing toward more clarity resulting in a demand for an alternate stablecoin than what is currently available.
About PayPal
For over 20 years, PayPal has remained at the front line of the digital payment revolution by using technology to make financial services and commerce more affordable, secure and convenient. In more than 200 markets PayPal platform is empowering hundreds of millions of merchants and consumers to thrive and join in the global economy. An exchange rate and fees are disclosed when users buy or sell cryptocurrency, including when they check out with crypto on PayPal.
For currencies other than PayPal USD, the exchange rate has a spread that PayPal earns in each purchase and sale. PayPal’s checkout feature allows users to convert crypto to fiat currency at checkout. Transactions are settled in fiat. PayPal USD will be available to merchants, developers and consumers to seamlessly connect fiat and digital currencies. As the only stablecoin supported within the PayPal network, PayPal USD averages decades-long experience in payments at scale, combined with blockchain protocols’ cost, speed and programmability.
PayPal USD reduces friction for in-experience payments in virtual environments, facilitates fast transfers of value to support family and friends, sends remittances or conducts international payments, enables direct flows to creators and developers and fosters the continued expansion into digital assets by the largest brands in the world.
Cryptocurrency Timeline with the PayPal Platform
On October 21 2020, PayPal announced its entrance into the crypto market and mentioned that its users can use crypto to shop starting in early 2021. Payments would be settled through fiat currencies, while PayPal would handle the conversion. Users can purchase crypto directly through the PayPal app, where the crypto wallet will allow users to buy, sell and hold crypto. According to experts from Bitcode Method in January 2022, PayPal confirmed exploring a stablecoin from PayPal as part of its cryptocurrency push.
PayPal Senior Vice President of Crypto and Digital currencies, Jose Fernandez da Ponte, mentioned that the company planned to move forward with the stablecoin project while working closely with regulators. In June 2022, PayPal was issued a BitLicence by the New York State Department of Financial Services (NYSDFS) after previously obtaining a conditional BitLicence. PayPal USD can be sold or bought via PayPal at a rate of $1.00 per PayPal USD. According to reports at the beginning of September 2023, Paxos will publish a monthly Reserve Report for PayPal USD outlining the instruments composing the reserves. Paxos will issue a public third-party attestation of the value of PayPal USD reserve assets.
PayPal is focused on increasing merchant and consumer comprehension of stablecoins, cryptocurrencies and central bank digital currencies (CBDCs) while working closely with regulators as the digital asset industry evolves. In addition to offering PayPal USD, PayPal offers US customers the ability to sell, buy, hold and transfer select crypto on the PayPal app.
