Paypal, a global online payment platform, has announced that it will launch its own US dollar-backed stablecoin a digital currency that is pegged to a fiat currency or a basket of assets, PYUSD in partnership with Paxos Trust Company, a regulated and licensed issuer of digital assets. This move has significant implications for the future of the crypto industry, as well as the broader financial system.
Stablecoins are designed to reduce the volatility and risk associated with cryptocurrencies, which often fluctuate wildly in value. They also offer faster and cheaper transactions than traditional payment methods, as well as greater transparency and security. By issuing its own stablecoin, PayPal could leverage its existing network of millions of users and merchants and offer them a new way to store and transfer value online.
However, PayPal’s stablecoin also poses some challenges and risks. For one thing, it could face regulatory hurdles and scrutiny from governments and central banks, who may see it as a threat to their monetary sovereignty and control. For another, it could face competition from other stablecoins, such as Facebook’s Diem (formerly Libra), or from central bank digital currencies (CBDCs), which are being developed by several countries around the world.
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According to a press release, PYUSD will be available for Paypal users to buy, sell, hold and transfer within the Paypal app, as well as to use it for payments across its network of 32 million merchants worldwide. The stablecoin will also be integrated with Venmo, PayPal’s mobile payment service, in the near future.
Paypal said that PYUSD will offer its customers a convenient and secure way to access the benefits of blockchain technology and cryptocurrencies, without the volatility and complexity associated with other digital assets. PYUSD will be fully backed by US dollars held in reserve by Paxos and will be redeemable at any time at a 1:1 ratio.
Paxos, which already provides Paypal with custody and trading services for its existing crypto offerings, will issue and manage PYUSD on its own blockchain platform, Paxos Chain. Paxos Chain is a permissioned, proof-of-authority network that leverages the Ethereum Virtual Machine (EVM) and is compatible with the Ethereum ecosystem. Paxos said that PYUSD will be compliant with the highest regulatory standards and will undergo regular audits and attestations.
Another benefit of PYUSD is its interoperability with other digital assets and platforms. As a stablecoin issued on Paxos Chain, PYUSD can be easily transferred to other Ethereum-based tokens or applications, such as decentralized exchanges, lending platforms or gaming platforms. Users can also swap PYUSD for other cryptocurrencies or fiat currencies on Paypal or Paxos platforms or redeem it for US dollars at any time.
Dan Schulman, president and CEO of Paypal, said: “We are excited to introduce PYUSD, a new way for our customers to access the potential of digital currencies and blockchain technology. PYUSD will enable millions of people to participate in the digital economy with confidence and ease. By partnering with Paxos, a leader in the digital asset space, we are able to offer a stablecoin that meets the highest standards of trust, transparency and regulatory oversight.”
Charles Cascarilla, CEO and co-founder of Paxos, said: “We are proud to collaborate with Paypal on the launch of PYUSD, a groundbreaking stablecoin that will bring more innovation and inclusion to the global financial system. Paxos is committed to creating a more open and accessible digital economy for everyone. By issuing and managing PYUSD on our platform, we are providing a secure and scalable infrastructure for this new form of money.”
