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US payments giant PayPal (NASDAQ: PYPL) announced the launching of its own USD-backed stablecoin, a move that would provide a significant boost to the adoption of digital tokens for payments.
The American multinational FinTech company has been an early adopter of crypto. The company’s crypto holdings surged past $1 billion in Q1 2023. With PayPal USD (PYUSD) stablecoin, the company would further strengthen its position in the digital payments market.
Paxos Trust Co. will be issuing the PYUSD stablecoin which will be fully backed by US Dollar deposits, cash equivalents, and short-term Treasuries, noted the company in its Monday announcement. Pegged to the US Dollar, the PayPal stablecoin will be gradually available to American users.
PayPal Chief Executive Officer Dan Schulman wants to make the company even stronger in digital payments with PYUSD. He aims to use technology that allows quick and cheaper transfers without needing a middleman. “The vision over time is that this becomes a part of the overall payments infrastructure,“ said Schulman in an interview with Bloomberg.
PayPal Addresses Regulatory Concerns
Schulman said that PayPal has been in extensive discussions with the US regulators and policymakers as it prepares to bring the PYUSD stablecoin to the market. He added:
“We are in a place right now in these conversations that people feel comfortable with a respected, well-regulated US financial entity moving into the stablecoin space and think that it’s an important initial move”.
With Paxos having the regulatory approval of NYDFS, the PYUSD stablecoin will also be functional in New York. Furthermore, starting in September, Paxos would publish monthly reports regarding the assets backing PYUSD.
PayPal PYUSD Stablecoin – Bridging Gap Between Fiat and Web3
At first, PayPal plans of using PYUSD stablecoin in cryptocurrency and web3 industries, such as trading digital tokens and making in-game payments. Later on, they hope to make it available for remittances and small payments.
Also, the PYUSD stablecoin is an Ethereum-based ERC-20 token, as per the press release. PayPal USD is made to make it easier to pay for things in virtual worlds and quickly send money to friends, family, or other countries, as well as used by developers and creators. Right from the start, it will work well with web3 platforms, and soon, you can use it on Venmo too.
Only a few players like USDT and USDC dominate the $126 billion stablecoin industry. Hopefully, with PYUSD, PayPal will be able to grab some share of the strongly evolving stablecoin market.
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