PayPal has launched its own dollar stablecoin. We tell you why it is necessary and what it means for the cryptosphere. As well as what prospects the new instrument has on the global financial market
After two years of development and portability, PayPal has launched its own dollar-stablecoin. And actually became one of the first major payment companies that were able to bring their crypto product to the mass market.
The stablecoin from the payment service was named PayPal USD and the stock ticker PYUSD. Its issuer is Paxos and it will be fully backed by dollar deposits, short-term treasuries and similar financial instruments. Its exchange rate is pegged to the U.S. dollar exchange rate. And the company will initially gradually make it available to PayPal customers in the US.
Stablecoin from PayPal will be exchangeable for dollars or other cryptocurrencies available in PayPal wallets. The company will set an exchange rate that includes the service’s commission on each conversion. PayPal USD will also be able to be used to pay for purchases through a wallet in Venmo, a popular payment app from PayPal. In addition, it will be possible to transfer the token to compatible third-party wallets that are not part of the PayPal network. At an early stage, PayPal expects that PYUSD will be used mainly in the cryptocurrency and Web3 sectors, for example, to exchange for other crypto-assets or for payments in blockchain games. Even then, steiblcoin will gradually gain traction in areas such as money transfers and micropayments.
Stablecoin from PayPal has every chance to join the list of the most popular stablecoins in the future.
PayPal itself has a developed infrastructure and is represented in many countries. It greatly facilitates cross-border payments and speeds them up.
PayPal is actively used by freelancers and developers with international customers. Our experts believe that PYUSD will be a convenient way for them to get paid. It is also interesting that PayPal by the readiness of its infrastructure bypasses many central banks that are just trying to develop digital national currencies (CBDC). In other words, we are witnessing the emergence of a corporate currency that has a chance to become a significant player in the currency market, displacing central banks.
PayPal is one of the global payment giants, so we would like to believe that the future of PYUSD is very bright. At least due to the support of 430 million users of the platform.
Pay Pal and cryptocurrencies
PayPal has been supporting transactions with cryptocurrencies for some time now. And allows users to store such of them as Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH) and Litecoin (LTC). In its earnings report for the first quarter of this year, the company said it stores about $1 billion worth of cryptocurrencies for its customers.
Since last year, users have been able to transfer cryptocurrency from PayPal accounts to third-party wallets. The company also invests in blockchain startups. And that includes recently leading a $52 million investment round for Magic. Which provides infrastructure for integrating digital wallets into online services and enterprise projects.
PayPal co-founder Peter Thiel’s Founders Fund venture capital fund began investing in Bitcoin back in early 2014. Shortly before the collapse of the crypto market in the spring of 2022, the fund sold almost all cryptocurrency assets, earning about $1.8 billion.
In 2021, it first became known that PayPal began looking for developers to create its own dollar-stablecoin. Despite regulatory scrutiny, problems over the BUSD issue, Paxos remained PayPal’s launch partner for the steblecoin. The company said the partnership was a milestone for the entire industry.
“PYUSD is a first-of-its-kind currency that represents the next stage in the evolution of the U.S. dollar on blockchain,” Paxos said.
And calling PayPal USD “the world’s most secure dollar-backed digital asset.” On the day of the announcement of the stablecoin, the U.S. House of Representatives issued a press release. And where it says that with proper regulation, stablecoins “could become the basis for a 21st century payment system in the United States.”
The PYUSD stablecoin is not yet available on cryptocurrency exchanges. And to purchase it, you must be verified on PayPal’s website.
Why it’s not a good idea to buy a rapidly growing asset and use highly leveraged...
Our experts told about its effect on cryptocurrency market “Merger” of...