PayPal is launching a stablecoin named PayPal USD (PYUSD) for payments and transfers. This stablecoin, issued by Paxos Trust Company, is backed by U.S. dollar deposits and similar cash equivalents. It will be gradually rolled out to eligible U.S. customers. This move marks the first of its kind from a major U.S. financial institution.
PYUSD users can transfer funds between PayPal and compatible external wallets, make person-to-person payments, and use it for purchases. Additionally, they can convert other supported cryptocurrencies to and from PYUSD. The exchange rates and fees for crypto transactions will be disclosed by PayPal.
The stablecoin’s purpose is to facilitate seamless in-app payments, fast transfers, remittances, and international payments, and support digital asset expansion. It will be an ERC-20 token on the Ethereum blockchain, making it easily adaptable by exchanges and external developers.
Stablecoins, like PYUSD, are tied to external assets, but they have faced some controversies, with regulatory scrutiny being a concern. Nevertheless, PayPal remains committed to responsible innovation and compliance in the digital currency space.
Paxos will regularly publish reports on the assets backing PYUSD, promoting transparency. Despite the stablecoin announcement, PayPal’s shares faced a slight drop due to investors’ disappointment with quarterly operating margins.
PayPal’s CEO, Dan Schulman, believes that stablecoins are essential in the shift toward digital currencies. The company’s track record of delivering new experiences to customers sets the foundation for contributing to the growth of digital payments through PayPal USD.
