PayPal Launches PYUSD, A New Stablecoin Backed By U.S. Dollar Deposits: Report
- PayPal is launching its stablecoin, PYUSD, which US dollar deposits, short-term Treasuries, and cash equivalents back.
- PYUSD will be gradually available to its US-based customers and can be exchanged for other cryptocurrencies.
PayPal has announced that it will be rolling out its stablecoin, called PayPal USD (PYUSD), which Paxos Trust Co. will issue. This is the first stablecoin launched by a major financial company and is expected to boost the adoption of digital tokens for payments.
US dollar deposits, short-term Treasuries, and similar cash equivalents will fully back PYUSD. It is pegged to the dollar and will gradually be available to PayPal’s US-based customers.
PYUSD is designed to be redeemable for dollars at all times and can be exchanged for other cryptocurrencies on its network. It can be used to fund purchases and will soon be available on PayPal’s popular payments app Venmo.
Users can eventually send their token holdings between a PayPal and a Venmo wallet. The coin can also be moved to compatible third-party wallets outside its network.
PayPal seeks to cement its dominance in digital payments by leaning on technology that enables instant and lower-cost transfers without a central intermediary. PYUSD is expected to be used mainly in the cryptocurrency and web3 sectors, such as for trading in and out of other digital tokens and in-game payments, before gradually gaining adoption in areas like remittances and micro-payments.
Paxos Trust Co. issues PYUSD and is fully backed by US dollar deposits, short-term Treasuries, and similar cash equivalents. The company believes the regulatory environment is “progressing toward more clarity” and sees rising demand for an alternative stablecoin because of how concentrated the market is. Jose Fernandez da Ponte, head of PayPal’s blockchain and digital currencies team, said in an interview that “the vision over time is that this becomes a part of the overall payments infrastructure.”
PayPal has more than 431 million active accounts globally and launched cryptocurrency services in 2020. It allows users to buy, sell, and make payments in a handful of tokens like Bitcoin through its platform.
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