PayPal has unveiled a U.S. dollar-backed stablecoin, marking a significant move in the crypto space by a major U.S. financial institution. The stablecoin, named PayPal USD (PYUSD), aims to revolutionize payments in web3 and other digital environments.
Stablecoin Features and Benefits
PYUSD is fully backed by U.S. dollar deposits, short-term U.S. treasuries, and similar cash equivalents. It can be redeemed on a 1:1 basis for U.S. dollars. This initiative is in response to the growing potential of stablecoins to reshape payments in digitally native settings.
PayPal USD, issued by Paxos Trust Company, enables users to transfer funds between PayPal and compatible external wallets, make person-to-person payments with PYUSD, purchase items with PayPal USD at checkout, as well as convert between PayPal's supported cryptocurrencies and PYUSD.
Dan Schulman, president and CEO of PayPal, emphasized the need for a stable digital currency that can easily connect to traditional fiat currencies like the U.S. dollar. He stated,
Our commitment to responsible innovation and compliance, and our track record delivering new experiences to our customers, provides the foundation necessary to contribute to the growth of digital payments through PayPal USD.”
Integration with Web3 and Broader Ecosystem
PayPal USD will be available to consumers, merchants, and developers, bridging the gap between fiat and digital currencies. As an ERC-20 token on the Ethereum blockchain, PYUSD can be adopted by a vast community of developers, wallets, web3 applications, and exchanges. It's designed to reduce friction in virtual payments, support fast value transfers, and foster the continued expansion into digital assets by major global brands. Notably, PayPal USD will soon be available on Venmo.
Transparency and Regulation
Issued by Paxos Trust Company, PayPal USD is subject to regulatory oversight by the New York State Department of Financial Services. Reserves for PayPal USD are fully backed by U.S. dollar deposits and other cash equivalents. Starting in September 2023, Paxos will release a monthly Reserve Report for PayPal USD, detailing the composition of the reserves. An independent third-party accounting firm will also provide an attestation of the value of PayPal USD reserve assets.
PayPal is also committed to enhancing understanding and adoption of digital currencies. The company offers educational content to help users comprehend the risks and opportunities associated with the technology.