On Monday, PayPal introduced a stablecoin backed by the U.S. dollar, marking a significant step in its range of cryptocurrency services. This marks the initial major move of its kind by a prominent U.S. financial institution.
The newly launched digital asset, named PayPal USD (PYUSD), has been specifically crafted to tap into the evolving potential of revolutionizing payments within web3 and digitally native environments. This release aligns with the ongoing anticipation in the market as Congress prepares to vote on a pivotal stablecoin legislation. Notably, this legislation has progressed to the House, alongside three other cryptocurrency-related bills, for the first time.
PayPal’s Stablecoin Vision and Schulman’s Stance
According to PayPal, the stablecoin aims to streamline and smoothen the process of making payments within virtual contexts, while also facilitating direct transfers to developers. This stablecoin can be exchanged for U.S. dollars and is backed by a combination of dollar deposits, short-term U.S. Treasuries, and similar highly liquid assets.
Dan Schulman, the CEO and president of PayPal, emphasized the necessity for a reliable tool in the realm of digital currencies that possesses characteristics of being digitally inherent while seamlessly linked with fiat currencies such as the U.S. dollar. He highlighted PayPal’s dedication to responsible innovation and adherence to regulatory standards, citing their history of introducing novel services to their customer base.
This established groundwork, according to Schulman, positions PayPal to play a pivotal role in fostering the expansion of digital payments through the introduction of PayPal USD.
After the announcement, PayPal’s stock experienced a gain of over 1%.
stablecoins are a category of cryptocurrencies linked to an underlying asset, often a fiat currency like the U.S. dollar, although some are tied to commodities or other financial instruments.
The issuance of PayPal USD is managed by Paxos, the same entity that previously introduced the dollar-pegged stablecoin BUSD associated with Binance. In February, the New York State Department of Financial Services directed Paxos to halt the issuance of BUSD, marking the initial step in this year’s decrease in the overall market capitalization of stablecoins.
PayPal’s debut stablecoin, backed by USD, signals a notable crypto stride. Amidst Congress’s upcoming sablecoin decision, PayPal enters web3 payments. The stablecoin aims for seamless virtual transactions and direct developer flows. CEO Schulman’s commitment sets the stage. PayPal stock rose post-announcement.