PayPal Introduces the PYUSD Stablecoin for Transactions

PayPal Introduces the PYUSD Stablecoin for Transactions

According to a Monday announcement from PayPal, a stablecoin will soon be available for use in payments and transfers. PayPal USD (PYUSD) is backed by short-term U.S. Treasury bonds, similar cash equivalents, and U.S. dollar deposits. It is issued by Paxos Trust Company. According to PayPal, stablecoin adoption among American clients is being phased in. The announcement made today is the first of its kind from a significant American financial institution.

When eligible U.S. PayPal users buy PYUSD, they can use it to fund purchases by selecting it at checkout, transmit payments between people using PYUSD, transfer PYUSD between PayPal and compatible external wallets, and convert other supported cryptocurrencies to and from PYUSD.

PayPal claims that it will reveal an exchange rate and any fees you will be paid for the transaction whether you purchase or sell bitcoin, including when you pay with it.

According to a press release from PayPal, “PayPal USD is designed to reduce friction for inexperienced users making payments in virtual environments, facilitate quick transfers of money to support friends and family, send remittances or make international payments, enable direct flows to developers and creators, and support the largest brands in the world’s ongoing expansion into digital assets. The majority of stablecoin usage now is in web3-specific environments; PayPal USD will be Venmo-compatible from day one and will soon be interoperable with that ecosystem.

According to PayPal, PYUSD will be made available to an expanding community of outside developers, wallets, and web3 applications as an ERC-20 token released on the Ethereum blockchain. It can also be quickly accepted by exchanges and used to power experiences inside the PayPal ecosystem.

PayPal Introduces the PYUSD Stablecoin for Transactions

Stablecoins are a particular kind of cryptocurrency whose value is based on an outside asset, such the dollar. Stablecoins have generated some debate. Following regulatory outcry, Meta ultimately decided to give up on its ambition to create its own stablecoin, named Diem, last year. According to Bloomberg at the time, PayPal itself halted development of its stablecoin earlier this year due to regulatory monitoring of cryptocurrencies.

When it started enabling users in the United States to purchase, hold, and sell cryptocurrencies in 2020, PayPal became the first company to offer crypto services. Then, in 2021, PayPal announced the rollout of Checkout with Crypto, a tool that let customers use cryptocurrencies to make purchases at millions of online stores. The business enabled customers to move cryptocurrency from their accounts to other wallets and exchanges last year.

“The shift toward digital currencies requires a stable instrument that is both digitally native and easily connected to fiat currency like the U.S. dollar,” PayPal CEO and president Dan Schulman stated in a press release. “The foundation required to contribute to the growth of digital payments through PayPal USD is provided by our commitment to responsible innovation and compliance, as well as our track record of bringing new experiences to our customers.”

Beginning the next month, according to PayPal, Paxos will issue monthly reports outlining the assets supporting PYUSD. A public third-party attestation of the PYUSD reserve asset value will also be made available by Paxos.

In extended trading on Wednesday, PayPal’s shares dropped 7% as a result of investors’ disappointment with the firm’s quarterly operating margin. The payment company’s quarter’s adjusted operating margin came in at 21.4%, falling short of the 22% projection.

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