Paypal Launches Dollar-Backed Stablecoin
Payments giant PayPal has launched a U.S. dollar stablecoin, becoming the first major financial technology firm to embrace digital currencies for payments and transfers.
By Anna B Kiwanuka
Paypal‘s entry into the stablecoin arena is generating significant online discussions as the financial giant unveils its dollar-backed stablecoin. In an interview with Bloomberg, Paypal CEO Dan Schulman shared his vision for integrating this new offering, named “PayPal USD (PYUSD),” into the broader payments infrastructure.
The stablecoin, issued by Paxos Trust Co., derives its support from U.S. dollar deposits, low-risk assets, and short-term Treasury securities, ensuring a strong connection to the U.S. dollar. With plans to gradually roll out to Paypal’s U.S. customer base, PYUSD aims to reinforce Paypal’s dominance in digital transactions by facilitating swift and cost-effective transfers without intermediaries. The launch follows earlier reports in February that indicated regulatory concerns had temporarily halted Paypal’s stablecoin project, with the company committing to close collaboration with financial regulators before proceeding.
Initially, PYUSD is set to facilitate cryptocurrency trading and in-game/app-based payments. As revealed by Bloomberg, Paypal envisions a future where the stablecoin enables affordable remittances and micro-payments. The ability to transfer PYUSD between Paypal and Venmo wallets will be complemented by Paxos’ provision of reserve reports and third-party attestations, adding to the stability and credibility of the new stablecoin offering.
Meanwhile, the two stablecoins issued by Paxos, BUSD and USDP, have seen their supplies decline considerably over the past 12 months. BUSD’s supply dropped by 15.6% over the past 30 days and USDP shrank by 34.1% this month