In a decisive move that underscores the growing influence of cryptocurrencies in the financial landscape, PayPal has taken the plunge into the world of stablecoins.
On August 7, 2023, PayPal announced its entry product into the world of cryptocurrencies: the PayPal USD (PYUSD) stablecoin. This new stablecoin derives its value from U.S. dollar deposits, short-term U.S. Treasuries, and comparable liquid assets. Paxos Trust Co will manage its issuance.
PYUSD operates within the Ethereum ecosystem, and it is designed to prioritize digital transactions and Web3 principles. It will facilitate seamless transfers between PayPal accounts and external wallets. Users can also engage in person-to-person payments and make purchases by selecting PYUSD during checkout. Additionally, PYUSD supports conversions between supported cryptocurrencies and itself.
PayPal announced that the stablecoin will soon be accessible to customers in the United States.
The launch of PYUSD signifies PayPal’s attempt to harness the benefits stablecoins offer within the realm of transactions and digital finance.
Dan Schulman, PayPal’s CEO, explained the rationale behind the creation of PYUSD, stating:
“The shift toward digital currencies requires a stable instrument that is both digitally native and easily connected to fiat currency like the U.S. dollar.”
Schulman emphasized that PayPal’s dedication to responsible innovation and adherence to regulations, combined with their proven history of introducing novel customer experiences, establishes the essential groundwork for their active role in advancing the expansion of digital payments using PayPal USD.
PayPal also noted that starting in September 2023, Paxos will release a monthly public Reserve Report for PayPal USD. This report will detail the specific instruments that constitute the reserves. Additionally, Paxos will provide a publicly accessible third-party attestation verifying the value of PayPal’s USD reserve assets.
This leap into stablecoins comes after PayPal’s robust portfolio cryptocurrency space became public knowledge. In February 2023, it came to light that PayPal concluded the year 2022 with a cryptocurrency portfolio worth $604 million. This information was disclosed in their annual report to the U.S. Securities and Exchange Commission (SEC), which highlighted their holdings of various cryptocurrencies, such as Bitcoin, Ether, Litecoin, and Bitcoin Cash.
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