PayPal takes another step into the crypto ecosystem. The American payment company has launched its own stablecoin called PayPal USD (PYUSD). Issued in partnership with Paxos, this stablecoin is backed by the US dollar and guaranteed by a dollar reserve and US treasury bills. It will be rolled out first to PayPal customers in the USA.
PayPal joins forces with Paxos to launch PYUSD stablecoin
The attraction of traditional financial players to the crypto ecosystem continues to grow. The payment company PayPal demonstrates this perfectly again today. With the aim of transforming digital payments, PayPal announced the launch of its stablecoin PayPal USD (PYUSD).
The American giant has made it known that this stablecoin is backed by the US dollar. This means that 1 PYUSD is worth 1 US dollar. Furthermore, the PYUSD is fully backed by US dollar deposits, short-term US Treasury bills and similar cash equivalents. The risk of a collapse like that the UST stablecoin in April 2022 is limited.
For PayPal, the PYUSD stablecoin is a secure tool in the transition from traditional finance to the crypto ecosystem. For Dan Schulman, President and CEO of PayPal, stablecoins like the PYUSD, have the advantage of being cryptocurrencies while still being attached to fiat currency.
The transition to digital currencies requires a stablecoin that is both digital native and easily connected to a fiat currency like the US dollar.Dan Schulman, President and CEO of PayPal.
The stablecoin from Paypal will be issued on the Ethereum blockchain by Paxos, a crypto company legally registered in the United States. Paxos is no stranger to issuing stablecoin.. The company is notably behind the BUSD, the stablecoin of Binance whose issuance was halted last February by order of the New York Department of Financial Services (NYDFS).
Paxos is also committed to promoting cryptocurrency adoption. In the past year, the company has joined Mastercard to enable banks to integrate crypto into their services.
The uses of PYUSD, PayPal’s stablecoin
The PYUSD stablecoin will be deployed first for PayPal’s US customers. It will seamlessly connect fiat to crypto, assures PayPal. More specifically, PYUSD will have four major uses :
- Transfer funds in PYUSD between PayPal and external wallets;
- Easy to send funds like all other stablecoins ;
- Being a new means of payment for customers PayPal ;
- Allow conversion into any cryptocurrency.
The launch of PayPal’s stablecoin perfectly illustrates the growing interest of finance companies in the crypto ecosystem. It’s probably just the beginning of a transition from traditional finance to cryptocurrency. For the time being, the PYUSD faces stiff competition in the stablecoin market. The PYUSD will have to contend with the USDT which, with $83.75 billion in capitalization, accounts for over 66% of the stablecoin market.
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