PayPal has made a move in the digital payment landscape by introducing its own fully-regulated stablecoin, PayPal USD (PYUSD). The stablecoin is denominated in US dollars and is designed to tap into the potential of stablecoins for seamless payments in web3 and digitally native environments.
This new stablecoin can be redeemed at a 1:1 ratio for US dollars and is issued by Paxos Trust Company. Eligible US PayPal customers can purchase PayPal USD and take advantage of several benefits, including transferring the stablecoin between PayPal and compatible external wallets, making person-to-person payments using PYUSD, and funding purchases by selecting PayPal USD at checkout. Additionally, PayPal customers can convert a number of supported cryptocurrencies to and from PayPal USD.
In the official press release, PayPal officials emphasised the need for a stable digital instrument connected to fiat currency like the US dollar, reflecting the company's commitment to responsible innovation and compliance.
PayPal USD aims to bridge the gap between fiat and web3 for consumers, merchants, and developers. As the only stablecoin supported within the PayPal network, it leverages PayPal's experience in large-scale payments and the advantages of blockchain protocols in terms of speed, cost, and programmability.
Being an ERC-20 token on the Ethereum blockchain, PayPal USD opens up new opportunities for developers, and it can be easily adopted by exchanges and integrated into the PayPal ecosystem.
The stablecoin's primary objectives include facilitating frictionless in-experience payments in virtual environments, enabling fast transfers of value for supporting friends and family, conducting remittances and international payments, and empowering direct flows to developers and creators.
This move by PayPal could potentially drive the expansion of digital assets among major global brands. According to the company press release, PayPal USD will be compatible with web3-specific environments and will eventually be accessible on Venmo.
To ensure transparency and accountability, PayPal USD is issued by Paxos Trust Company, which is fully licensed and regulated by the New York State Department of Financial Services. Reserves for PayPal USD are fully backed by US dollar deposits, US Treasuries, and similar cash equivalents, with a fixed rate of USD 1 per PayPal USD. Paxos will also publish monthly Reserve Reports and third-party attestations of the value of PayPal USD reserve assets, following established standards set by the American Institute of Certified Public Accountants (AICPA), starting in September 2023.
For more information about PayPal, please check out their detailed profile in our dedicated, industry-specific Company Database.
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